Monetary Policy
Wednesday, October 6th, 2010 at
12:55 am
The effects of monetary policy on the economy
Tagged with: Monetary • Policy
Filed under: Uncategorized
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Thanks for your help and I hope one day I will succes in Nationaleconomy like u.
God bless for your help
Ahhh! I rated this 1 star by mistake when I meant to hit pause! I want to give it 5 stars
Q 1: Whether cheap money leads to inflation or not depends on whether there is spare capacity in the economy; if there is, then AS can increase alongside AD, if not then inflation (or a worsening current account) is likely to result
Q 2: This has to do with perceived market failure. Prices set by the free market may not take account of externalities. Having said that, long term interest rates are set by the market and will reflect what direction the market believes interest rates will go
I like the video, good explanation.
Question: Isn’t the growth merely short term? Doesnt low interest rates, cheap money, lead to inflation, and inflated asset prices? As we saw in the US housing market.
Question: Why does the government, and not the market, set interest rates? Would the the interest rate not better reflect the actual risk, if interest rates were set by the market?