Monetary policy
What Monetary policy means in Economics B A-Level, as defined for Pearson Edexcel.
Definitions of Monetary policy
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Reference: Pearson Edexcel
Managed by the Bank of England's Monetary Policy Committee, it uses interest rates and the money supply to influence borrowing and saving behaviour.
The central bank manipulating interest rates and the money supply to achieve macroeconomic objectives, primarily controlling inflation.
Macroeconomic policy involving changes in interest rates or the money supply, such as quantitative easing.
A demand-side measure such as raising or lowering interest rates to control inflation or unemployment.
A demand-side measure that can be expansionary, such as cutting interest rates, or contractionary.
Topics that use Monetary policy
- Demand-side policies (Pearson Edexcel A-Level)
- The impact of macroeconomic policies (Pearson Edexcel A-Level)
- The role of the central bank (Pearson Edexcel A-Level)
Related terms
- Fiscal policy
- Aggregate demand
- Aggregate demand and supply
- Base rate
- Central bank
- Central banking
- Demand-pull inflation
- Economic indicators
Using Monetary policy in the exam
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