macroeconomic policy ( monetary policy)

Question 1

What type of policy is monetary policy ?

Answer 1

Demand side policy used to influence shifts of aggregate demand.

Question 2

Definition of monetary policy

Answer 2

Changes to interest, the money supply and the exchange rate by the central bank in order to influence AD and achieve economic objectives such as…

Question 3

What are the Macro objectives monetary policy aims to achieve?

Answer 3

Macro-ecomic stability/ economic growth

Inflation targeting (price stability)

full employment

Question 3

Difference between expansionary and contractionary monetary policy

Answer 3

Expansionary - Increase AD

Contractionary- Decrease AD

Question 4

Aims of expansionary Monetary policy?

Answer 4

(Increase AD)

Increase Demand pull inflation to hit inflation target.

Boost economic growth

Manage unemployment

Question 5

what system enforces Monetary policy

Answer 5

The central bank

Question 6

Contractionary monetary policy aims?

Answer 6

Reduce inflation if beyond target ( reduction in ad will cause this)

Question 7

How does changes in interest rates influence: UNEMPLOYMENT, INFLATION, BALANCE OF PAYMENTS, ECONOMIC GROWTH?

Question 8

how does changes in money supply influence :UNEMPLOYMENT, INFLATION, BALANCE OF PAYMENTS, ECONOMIC GROWTH?

Question 9

How does changes in exchange rates influence

Question 10

real life examples of changing interest rates