Monetary Policy Flashcards

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Monetary Policy

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FLASHCARDS!!! WAHOO for monetary policy gcse economics

9 Terms

1

Monetary Policy

A policy that aims to control the total supply of money in the economy to try to achieve the government’s economic objectives, particularly price stability.

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2

Inflation target

2% + - 1% CPI

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3

Aggregate demand formula

C + I + G + (X - M)

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4

Bank/Base interest rate

The base rate of interest set by the Bank of England

<p>The base rate of interest set by the Bank of England</p>
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5

Price stability

When average consumer prices for goods and services are constant over time, or are rising at a low and predictable rate

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6

“Big ticket items”

Large purchases such as cars or computers

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7

Contractionary monetary policy

Where the Bank Of England raises interest rates to combat rising inflation

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8

Expansionary monetary policy

Where the Bank Of England lowers interest rates to combat falling inflation

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9

Quantitative Easing

Where the Bank Of England makes more money available for financial institutions to lend to households and firms

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