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CHAPTER 12: MONEY, FINANCIAL MARKETS, INTEREST RATE DETERMINATION, CENTRAL…
CHAPTER 12: MONEY, FINANCIAL MARKETS, INTEREST RATE DETERMINATION, CENTRAL BANKING AND MONETARY POLICY
MONEY
Definition
Money can be defined as any object that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context.
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Interest Rate
Definition
The rate of interest measures the percentage reward a lender receives for deferring the consumption of resources until a future date. Correspondingly, it measures the price a borrower pays to have resources now.
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MONETARY POLICY
Monetary policy is a set of tools used by a nation's central bank to control the overall money supply and promote economic growth and employ strategies such as revising interest rates and changing bank reserve requirements.