Fixed Interest Securities
When economy is booming, this will push the price up generating inflation and higher interest rates.
When interest rates and inflation is low and falling, the income from the fixed interest securities becomes more attractive
Fiscal Policy
Use of government spending and taxation
Monetary Policy
Control interest rates and the supply of money
Money Supply M0 and M4
M0 = Narrow money, includes notes and cops in circulation plus banks deposits.
- Indication of consumer spending and retail sales
- Growth in M0 means that consumers spending is buoyant and contraction indicates consumers are acting more cautiously
M4 = Broad Money, same as above plus bank accounts of banks and building societies .
Acts as an indicator of the economy:
- Increased demand for loans if reflected in a faster growth of M4
Bank of England can influence the volume of money in circukatuin by selling and purchasing treasury bills and government stock
