monetary policy

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monetary policy
controlling the macro-economy via changes in monetary variables such as the money supply or interest rates
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central bank
the financial institution in a country or group of countries typically responsible for issuing notes and coins and setting short-term interest rates
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interest rate
the cost of borrowing or the reward for saving
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real interest rate
the money rate of interest minus the rate of inflation
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transmission mechanism of monetary policy
how changes in the base interest rate influence the components of AD
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RPIX
a measure of the price level that excludes payments to service mortgage interest from the Retail Price Index measure. Used as the target measure for inflation by the govt. and MPC until the end of 2003
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Repo rate
the interest rate that is set by the MPC of the Bank of England in order to influence inflation. Short for 'sale and repurchase rate'.
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CPI (Consumer Price Index)
a measure of the price level similar to the HICP (harmonised index of consumer prices) used widely in the Eurozone. Used since 2004 as the target measure for inflation by the government and MPC
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money supply
the total amount of money in an economy
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exchange rate
the price at which one currency e.g. the £, exchanges for another e.g. the $
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narrow money
notes, coins and balances available for normal transactions
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broad money
money that is held in banks and building societies but that is not immediately accessible
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hot money
money that is liable to rapid transfer from one country to another
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Card 2

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the financial institution in a country or group of countries typically responsible for issuing notes and coins and setting short-term interest rates

Back

central bank

Card 3

Front

the cost of borrowing or the reward for saving

Back

Preview of the back of card 3

Card 4

Front

the money rate of interest minus the rate of inflation

Back

Preview of the back of card 4

Card 5

Front

how changes in the base interest rate influence the components of AD

Back

Preview of the back of card 5
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