Macroeconomic Policy Revision - Monetary Policy

Following up from my fiscal policy revision notes, these are notes I made on monetary policy.  Again, apologies for the last diagram - I couldn't find it anywhere on the internet so had to make half of it in Paint... :P I think these notes are fairly comprehensive but please say something if you think of anything that could be added.

Hope they help!


HideShow resource information
  • Created by: origen5
  • Created on: 02-04-15 18:12

Pages in this set

Page 1

Preview of page 1
Macroeconomic Policy Revison Notes - Monetary Policy

Definition: Managing the economy via the use of interest rates and the money supply.

Framework: Government sets the target for monetary policy to achieve in terms of inflation rate (currently
2.0% CPI +/- 1.0%). The Bank of England's Monetary Policy Committee (MPC) has…

Page 2

Preview of page 2
Drawbacks of Monetary Policy

1) Significant Time Lags: - The monetary policy 'transmission mechanism' means it takes 18-24 months for
effects of the policy change to be felt in the economy.

2) 'Blunt' Policy Type: - Unlike fiscal policy, monetary policy cannot be used to target specific problems
within an…


No comments have yet been made

Similar Economics resources:

See all Economics resources »