monetary policy Flashcards
module 11
1
Q
what does the fed pursue
A
macroeconomic goals (through money supply)
2
Q
define monetary policy
A
adjustments of money supply by central bank TO pursue a macroeconomic goals
3
Q
what are some goals of federal reserve
A
- price stability
- high employment
- economic growth
-stability of financial markets/institutions
4
Q
monetary policy moves..
A
fast, can be in the workings overnight & the impact wont be catastrophic (more of a minimal effect)
5
Q
what is a demand for money
A
if the interest rate is high the desire for cash $ the lower the demand for money and vice versa
6
Q
increase in supply does what for interest rates
A
interest rates lower
7
Q
how do interest rates effect aggregate demand
A
- consumption (interest rates up = consumption down)
- Investment (interest up = investment down)
8
Q
2 types of monetary policy
A
- expansionary
- contractionary
9
Q
expansionary M.P.
A
increase money supply to lower interest rates
10
Q
contractionary M.P.
A
Decreasing the money supply to increase interest rates
10
Q
A
