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Monetary Policy - Coggle Diagram
Monetary Policy
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Quantitive easing
This is used by banks to help to stimulate the economy when standard monetary policy is no loner effective.
This has inflationary effects since it increases the money supply and can reduce the value of the currency
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QE is a form of Monetary Policy i which the central bank purchases longer term securities from the open market in order to increase the money supply and encourage lending by banks and investors.
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The main tool the MPC have at their disposal is interest rates, although they may use other tools to influence the money supply such as quantitive easing
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