5.3 Monetary policy Flashcards
1
Q
Define the term “Central bank”
A
Banks owned by the gov. that provides banking services to the gov. and commercial banks and which operates monetary policy.
2
Q
Define the term “Commercial banks”
A
Banks which aim to make a profit by providing a range of services to firms and households.
3
Q
Define the term “Monetary policy”
A
The use of interest rates, the money supply, credit regulations and the exchange rate to influence aggregate demand.
4
Q
Define the term “Interest rates”
A
The price of borrowing money and the reward for saving.
5
Q
Define the term “Money supply”
A
The total amount of money in a country.
6
Q
Define the term “Credit regulations”
A
Rules affecting bank lending.
7
Q
Define the term “Target rate for inflation”
A
The rate a central bank is set to achieve.
