5225918
Descrição
FlashCards por Tara Pugal, atualizado more than 1 year ago
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Criado por Tara Pugal
mais de 8 anos atrás
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| Questão | Responda |
| What is MP? | manipulating the money supply in order to achieve economic objectives (NOT JUST IR) |
| MP diagram for expansionary MP | ↓ir = ↑C, ↑I = PME = ↑AD ↓ir = ↑I = ↑SRAS ↓ir = ↑I = ↑LRAS ↓ir = ↓reward of saving, ↓cost of borrowing = ↑C,↑I = ↑AD = ↑GDP ↑QE/AP = ↑MS = ↑C,↑I = ↑AD = ↑GDP |
| What is bad about MP? (4) | time lags (18 moths to 2 years) magnitude (size of change has relative effect) not ceteris paribus ↓ir may not get passed on to consumers |
| What is QE/AP? | ↑MS to stimulate AD |
| How does QE/AP work? | bank creates money to buy bonds from firms (if they buy lots then ↑D = ↑P so there will be less interest) this reduces ir (↓reward of saving and cost of borrowing) leading businesses and people to borrow more so they spend more and create jobs to boost the economy |
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