Macroeconomic Analysis

EconomicsAdvanced Level

10 flashcards

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Question

What are the main tools of monetary policy and how do they influence the economy?

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Answer

Definition

Monetary policy tools include interest rate adjustments, open market operations, and reserve requirements, which influence money supply and borrowing costs.

Example

When the central bank lowers interest rates, it encourages borrowing and spending, stimulating economic growth.

Quick Tip

Remember: lower rates = more spending.

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