Monetary policy Flashcards
1
Q
What is monetary policy?
A
A policy that aims to control the total supply of money in the economy
2
Q
What is expansionary /contractionary monetary policy ?
A
Expansionary monetary policy government tries to increase economic activity
Contractionary policy -government tries to decrease economic activity eg-if economy goes to fast causes inflation
3
Q
What are the two monetary policies?
A
Interest rates and money supply
interest rates -cut them to increase economic activity,or increase interest rates to decrease economic activity
4
Q
What is quantitive easing?
A
Government purchases exsisting bonds
