Monetary & Fiscal Policy Flashcards
1
Q
Monetary Policy: Controlling Money Supply
A
So far, we have discussed how the monetary authority can target the real interest rate
through the nominal interest, i.e. fisher equation.
But historically, monetary policy was conducted by controlling the money supply. And in many ways, the actual implementation of monetary policy, i.e. open market operations, Foreign exchange market operators, etc. deal with shifts in the money supply.
2
Q
Money Market
A
3
Q
Shifts in Money Supply: Nominal Interest Rates
A
4
Q
Negative Shifts in Money Supply: Nominal Interest Rates
A
5
Q
Equilibrium in the Economy
A
6
Q
LM Curve
A
7
Q
Equilibrium in the Money Market
A
8
Q
LM Curve: Money Market Equilibrium
A
