1
Q
Who controls monetary policy?
A
The central bank
2
Q
What is monetary policy?
A
Control of money supply and interest rates by the central bank to influence the economy.
3
Q
Main goal of monetary policy?
A
Low and stable inflation.
4
Q
What is expansionary monetary policy?
A
Lower interest rates/increase money supply to boost AD
5
Q
What is contractionary monetary policy?
A
Higher interest rates/reduce money supply to lower inflation.
6
Q
What happens when interest rates fall?
A
Borrowing and spending increase.
7
Q
What is quantitative easing (QE)?
A
Creating money to buy financial assets and increase money supply
8
Q
One advantage of monetary policy
A
Quick to implement.
9
Q
One disadvantage of monetary policy?
A
Time lags
econ
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