b) Monetary policy

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4 Terms

1
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  • quantitative easing


  • when the central bank creates new money electronically and buys gilts from the open market to increase the money supply


2
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  • the characteristics of the Bank of England Monetary Policy Committee


  • nine members

  • they meet eight times a year to set the monetary policy and keep the 2% inflation rate target

  • they set the base rate and discuss the need for quantitative easing

  • decided by majority vote


3
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  • monetary policy takes (?) to effect the economy


  • 18-24 months


4
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  • the factors that influence decision-making by members of the Monetary Policy Committee


  • the inflation rate

  • the unemployment rate

  • the RGDP growth rate (potential output gaps)

  • economic predictions