Chapter 9 - Monetary policy

Monetary policy

Central bank policy and decision to generate Y9 (econ growth)

Fiscal policy

Gov drafted policy to grow econ and increase employment

Inflation

Annual avg increase of goods in econ

Deflation

Annual avg increase of goods in econ

PC

RS btw inflation, growth/U for a given actual inflation expectation

Quantity theory of money

inlfation is caused by change in M S=

rp

r level set by central banks to stabilise economy

Quantitative easing

OMO monetary policy to stimulate economy when r targeting fails