18. Monetary policy Flashcards
1
Q
Monetary policy
A
A government policy used to manipulate AD using the exchange rate, interest rate and money supply.
2
Q
Central bank
A
The financial institution in a country or group of countries responsible for printing notes and coins and setting the policy rate
3
Q
Interest rates
A
The cost of borrowing and the reward for saving
4
Q
Real interest rate
A
The interest rate adjusted for inflation
5
Q
CPI
A
Measure of the price level
6
Q
Money supply
A
The total amount of money in an economy
7
Q
Exchange rate
A
The value of one currency against another (Eg. £1 = $1.4)
8
Q
Hot money
A
Money that is liable to rapid transfer from one country to another
