Monetary Policy

key terms

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economic fluctuations

GDP

inflation

investment

unemployment

Monetary policy is a central bank’s use of either the money supply and/or interest rates to influence economic activity (Froyen, Richard (2009). Macroeconomics Theories and Policies. Pearson Prentice Hall).

Interest Rate Output Unemployment Inflation
Money Supply Increases
Money Supply Increases

Note: Output changes because of the interest rate's affect on investment.

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