Overview
Monetary policy is a vital tool used by central banks to influence a country's economic activity, particularly during recovery phases. By adjusting interest rates and controlling the money supply, central banks aim to stabilize the economy, manage inflation, and promote growth. Understanding the mec...
Key Terms
Example: The Federal Reserve uses monetary policy to influence economic growth.
Example: A lower interest rate can encourage borrowing and spending.
Example: High inflation can reduce the purchasing power of money.
Example: The central bank bought government bonds to inject money into the economy.
Example: Economic growth is often measured by GDP.
Example: Banks need liquidity to meet withdrawal demands.
Related Topics
Fiscal Policy
The use of government spending and taxation to influence the economy.
intermediateEconomic Indicators
Statistics that provide information about economic performance and trends.
intermediateGlobal Economic Policies
How different countries manage their economies through various policies.
advancedKey Concepts
Interest RatesInflation ControlQuantitative EasingEconomic Growth