Learning objectives
Define monetary policy and describe its tools: interest rates, the money supply and credit regulations
Explain how a change in interest rates works through borrowing, saving, asset prices and the exchange rate to change aggregate demand
Distinguish expansionary from contractionary monetary policy and use AD/AS analysis to show their effects on real output, the price level and employment
Evaluate monetary policy, including time lags, inflation targeting and weak effects in a deep recession or against cost-push inflation
(A Level) Explain quantitative easing as a way for a central bank to increase the money supply
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