Monetary policy
Money supply, monetary policy and changes in interest rates, money supply and foreign exchange rates and their effects on macroeconomic aims.
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Monetary Policy
Monetary policy is the process by which the government, central bank, or monetary authority of a country controls
Open resource →Revision NotesInterest rates affect on economy
Controlling the interest rates affects the aggregate demand, inflation rate and the exchange rate.
Open resource →Revision NotesHow the supply of money affects the economy
If the Government reduces the supply of money, banks and money lenders will find they have less money to lend to people and firms.
Open resource →Revision NotesHow government controls the money supply
Money supply includes all the notes and coins in circulation with the public plus the money with banks.
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