Monetary policy

Question 1

what is monetary policy

Answer 1

Changes to interest rates the money supply and the exchange rate by the central bank of an economy in order to influence Aggregate demand. This is a policy enacted by a country central bank to control inflation and hit the inflation target of 2 percent.

Question 2

Goals of central banks using monetary policy

Answer 2

boot aggregate demand ( boost short run economic growth and reduce mainly Cyclical unemployment )
hit the inflation target - transmission mechanism
Macro economic stability

Question 3

What are the two types of monetary policy

Answer 3

Contarctionary monetary policy and expansionary monetary policy -

INFLATION TARGETING -
Reduces AD to hit the inflation target.
Reduction of AD can reduce demand pull inflation hitting the target 2%

macro economic stability

Prevent excessive growth of house prices and prevent excessive credit

Question 4

what is contractionary monetary policy ?

Answer 4

slows down and overheated economy

INFLATION TARGETING -
Reduces AD to hit the inflation target.
Reduction of AD can reduce demand pull inflation hitting the target 2%

macro economic stability

Prevent excessive growth of house prices and prevent excessive credit

promote Saving - reducing excess debt

reduce current account deficit

Question 5

Expansionary monetary policy

Question 6

interest rates definition

Answer 6

Cost of borrowing

Question 7

what is the technical terms of a currency increasing and decreasing

Answer 7

depreciation
appreciate

Question 8

what side is monetary policy

Answer 8

A demand side policy