Overview
Monetary policy is a vital tool used by central banks to manage economic stability and growth. By controlling the money supply and interest rates, central banks aim to achieve goals such as low inflation and high employment. In a globalized economy, the effects of these policies extend beyond nation...
Key Terms
Example: The Federal Reserve adjusts interest rates to control inflation.
Example: The European Central Bank oversees monetary policy in the Eurozone.
Example: A 2% inflation rate means prices increase by 2% over a year.
Example: A higher interest rate can reduce borrowing and spending.
Example: The exchange rate between the US dollar and the euro fluctuates daily.
Example: The Fed buys bonds to increase the money supply.
Related Topics
Fiscal Policy
The use of government spending and taxation to influence the economy.
intermediateGlobal Trade
The exchange of goods and services between countries and its economic implications.
intermediateExchange Rate Economics
The study of how exchange rates are determined and their impact on trade.
advancedKey Concepts
Interest RatesInflation ControlExchange RatesGlobal Trade Impact