households , firms , government , foreign consumers
2 of 13
formula for AD
C+G+I+X-M
3 of 13
what is monetary policy ?
MP is aimed of achieving low and stable inflation
4 of 13
what is inflation ?
increase in general price level over period of time
5 of 13
what is CPI?
consumer price index
6 of 13
what CPI represents ?
CPI represents an average price of basket of goods
7 of 13
what inflation rate is the target for the central bank ?
from 1 to 3 %
8 of 13
centrals bank purpose is to...
control inflation and supervise commercial banks
9 of 13
3 elements of the monetary policy ?
money supply , control interest rates , influence exchange rates
10 of 13
difference between commercial and central banks
central bank is trying to make sure that the economy is stable , commercial banks- to make profit
11 of 13
who does the MP?
central bank
12 of 13
problems with monetary policy
1- commercial banks may not reduce the lending rates when the bank rate goes down; 2- commercial banks may not reduce the lending rates when the bank rate goes down
13 of 13
Other cards in this set
Card 2
Front
who demand goods in the economy?
Back
households , firms , government , foreign consumers
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