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C11: MACRO POLICIES - Coggle Diagram
C11: MACRO POLICIES
1. MONETARY
: USE BNM TO CONTROL MONEY SUPPLY
TO SOLVE UE
: EXPANSIONARY MONETARY
LOWERING RESERVES REQ.
BNM lower reserves req
MS in CB increase
CB can offer more loans to consumer
cash increase in consumer
purchasing power increase
econs expand
LOWERING DISCOUNT RATE
lower discount rate
CB can borrow more money (MS increase)
CB can offer more loans to consumer
purchasing power increase
econs expand
OPEN MARKET- PURCHASE BOND
BNM buy bond from people
people receives cash
MS increase
purchasing power increase
economy expand
LOWERING INTEREST RATE
BNM persuade CB to lower its interest rate
CB can offer more loans to consumer
purchasing power increase
econs expand
TO SOLVE INFLATION
: CONTRACTIONARY MONETARY
INCREASING DISCOUNT RATE
INCREASING THE RESERVES REQ
INCREASING INTEREST RATE
CLOSE MARKET - SELL BOND
BNM sell bond to people
MS decrease
purchasing power decrease
econs slow down
2. FISCAL
: USE TAX & G EXPENDITURE
TO SOLVE UE
: EXPANSIONARY FISCAL
TAX DECREASING
income burden decreasing
cash in consumer increase
purchasing power increase
econs expand
G EXPENDITURE INCREASE
subsidies increase
cash in consumer increase
purchasing power increase
econs expand
TO SOLVE INFLATION
: CONTRACTIONARY FISCAL
TAX INCREASING
cash decrease
purchasing power decrease
Income burden increase
econs slow down
G EXPENDITURE DECREASE