what: monetary policy
- Describe the role of central banks as regulators of commercial banks and bankers to governments.
- Explain that central banks are usually made responsible for interest rates and exchange rates in order to achieve macroeconomic objectives.
- Explain, using a demand and supply of money diagram, how equilibrium interest rates are determined, outlining the role of the central bank in influencing the supply of money.
- Explain how changes in interest rates can influence the level of aggregate demand in an economy.
- Explain the mechanism through which an easy (expansionary) monetary policy can help an economy close a deflationary (recessionary) gap.
- Construct a diagram to show the potential effects of an easy (expansionary) monetary policy, outlining the importance of the shape of the AS curve.
- Explain the mechanism through which a tight (contractionary) monetary policy can help an economy close an inflationary gap.
- Construct a diagram to show the potential effects of a tight (contractionary) monetary policy, outlining the importance of the shape of the AS curve.
- Explain how central banks of certain countries, rather than focusing on the maintenance of both full employment and a low rate of inflation, are guided in their monetary policy by the objective to achieve an explicit or implicit inflation rate target.
- Evaluate the effectiveness of monetary policy through consideration of factors, including the independence of the central bank, the ability to adjust interest rates incrementally, the ability to implement changes in interest rates relatively quickly, time lags, limited effectiveness in increasing aggregate demand if the economy is in deep recession and conflict among government economic objectives.
- What is defined as money?
- How does modern fractional banking operate?
- Why is a central bank often referred to as the lender of last resort?
What is money?
How does modern fractional banking operate?
Why is a central bank often referred to as the lender of last resort?
- What is defined as money for the purposes of Economics?
- How does modern fractional banking work?
- What are the 4 roles of the central bank of a country?
- How are interest rates determined? You will need economic diagrams (graphs) for this as well as an explanation.
- How is monetary policy used to solve a recessionary gap or an inflationary gap?
- How effective is monetary policy, what are the limitations of monetary policy?
- A bio of Milton Friedman the father of modern monetary theory?
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Definition: Elasticity is a measure of the responsiveness of the quantity demanded or supplied of a good or service, to changes in any of the factors that determines it. WOULD A SLAVE REDEMPTION OR GUN BUY BACK SCHEME PROGRAM BE SUCCESSFUL? 1.) Read the article below:a.) What is a commodity?b.)
The following are generally regarded as the main factors when evaluating monetary polcy:
The ability to adjust interest rates incrementally
Limited effectiveness in increasing aggregate demand if the economy is in deep recession
Conflict among government economic objectives (inflation/unemployment, balance of payments, risk of capital flight)
remembering milton friedman - an obituary (New york times 2006)
The only economic lever that Mr. Friedman would allow government to use was the one that controlled the supply of money - a monetarist view that had gone out of favor when he embraced it in the 1950s. He went on to record a signal achievement, predicting the unprecedented combination of rising unemployment and rising inflation that came to be called stagflation.