The money supply (Macro) Flashcards
Policies the government can use to increase the money supply
1
Q
What policies can the government use to increase money supply?
A
-Quantitative easing
-Funding for lending scheme
-Forward guidance
2
Q
What is quantitative easing?
A
Electronically created money to buy bonds from private investors, then private investors buy corporate bonds and shares, stimulating spending. (effectively increasing liquidity)
3
Q
What is the funding for lending scheme?
A
Banks and lenders can swap assets they have with the Bank of England for treasury bills, as these are liquid it can be used to borrow from elsewhere at low interest rates.
4
Q
When was FLS introduced?
A
2012
5
Q
What is forward guidance?
A
Announcements about future likely direction of monetary policy.
