b) Monetary policy

b) monetary policy instruments: interest rates, asset purchases to increase the money supply (quantitative easing)

g) the role of the Bank of England: the role and operation of the Bank of England's Monetary Policy Committee 

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

Bank of England Monetary Policy Committee

• nine members

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

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

• decided by majority vote

monetary policy takes 18-24 months to effect the economy

the factors that influence decision-making by the Bank of England Monetary Policy Committee

• the inflation rate

• the unemployment rate

• the RGDP growth rate (potential output gaps)

• economic predictions