Pages in this set

Page 1

Preview of page 1
Monetary Policy ­ Revision Sheet
Controlling the macroeconomy through changes in monetary variables (e.g. money
supply or interest rates)
Policies that aim to influence economy's AD (Designed either to stabilise level of
output and employment or stabilise price level)

Prime Instrument = Interest Rate

Through the interest rate, monetary policy…

Page 2

Preview of page 2
Business Investment ­ Firms look at actual and expected interest rates when
deciding whether or not to invest in new capital equipment ­ A rise in short term
rates may dampen business confidence and lead to less investment

Exchange Rate - Higher UK interest rates may lead to the strengthening…

Page 3

Preview of page 3




really helpful, thanks



A 2 page summary of how monetary policy works. Useful for last minute revision.

Similar Economics resources:

See all Economics resources »