Monetary policy
What Monetary policy means in Economics A-Level, as defined for AQA.
Definitions of Monetary policy
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Reference: AQA
The use by the MPC of the Bank of England of changes in bank rate to try to achieve the objectives for monetary policy, including the government's target rate of inflation.
The use of changes in bank rate by the Monetary Policy Committee to try to achieve the objectives for monetary policy, including the government's target rate of inflation.
Implemented by the central bank, primarily by setting the base interest rate to target inflation and manage aggregate demand.
Involves the central bank taking action to influence interest rates, the supply of money and credit and the exchange rate.
What the Bank of England controls, as opposed to fiscal policy, which the government manages.
Topics that use Monetary policy
- Central banks and monetary policy (AQA A-Level)
Related terms
- Aggregate demand
- Credit creation
- Economic governance
- Economic indicators
- Exchange rates
- Financial stability
- Hot money flows
- Inflation
Using Monetary policy in the exam
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