monetary policy

Question 1

define monetary policy

Answer 1

Where the government tries to control the economy by adjusting the money supply (usually through adjusting interest rates).

Question 2

define interest rates

Answer 2

The price of borrowing money or the return made on saving it.

Question 3

effects of a rising interest rates (business)

Answer 3

business cost rises.
cuts into profits.
discourages a business from borrowing

Question 4

effects of a lowering interest rate (business)

Answer 4

Lower business costs
raise business profits
incentive to borrow and expand for businesses

Question 5

effects of a lowering interest rate (consumer)

Answer 5

increase in borrowing, less incentive to save. More incentive to spend

Question 6

effects of a rising interest rates (consumer)

Answer 6

decrease in borrowing but there is more incentive to save