Monetary Policy Flashcards
(10 cards)
1
Q
Two main tools
A
Interest rates
Credit control
2
Q
What’s happens to strength of the pound if interest rates increase? And why?
A
Pound gets stronger
People want to incest in the pound
3
Q
Aim to control inflation
A
Decrease CC
Increase i
4
Q
If interest increase what’s happens to determinants of AD?
A
Consumption decreases Investment decreases Government spending increase Exports decrease Imports increase
5
Q
Limits to monetary policy
A
Confidence of people Conflicting objectives Size of drop in i Conflicting policies Time
6
Q
Will cheaper exports impact the economy
A
Not really as we don’t produce solid goods
7
Q
What’s the trade cycle
A
Economy through different stages
8
Q
What’s happens in a boom period
A
High economic growth High employment Equality gap better Confidence Debt reduces Worse BofP
9
Q
What happens in trough
A
Opposite of boom
10
Q
Aim of monetary policy
A
Influence aggregate demand
Influence the money supply
