Monetary Policy
Definition
Monetary policy refers to actions taken by a central bank (such as adjusting interest rates or controlling money supply) to manage and stabilize an economy's money supply, credit availability, and interest rates.
Related terms
Fiscal Policy: Government policies concerning taxation and spending that influence economic activity.
Inflation Targeting: A monetary policy strategy aimed at maintaining low and stable inflation rates over time.
Open Market Operations: The buying or selling of government securities by central banks to control money supply and interest rates.
"Monetary Policy" appears in:
Subjects (4)
AP Human Geography
AP US Government
AP US History
Intro to Business
Study guides (6)
AP Macroeconomics - 2.2 Limitations of GDP
AP Macroeconomics - 2.4 Price Indices and Inflation
AP Macroeconomics - 4.5 The Money Market
AP Macroeconomics - 5.1 Fiscal and Monetary Policy Actions in the Short-Run
AP Macroeconomics - 6.3 Foreign Exchange Market
AP Macroeconomics - 6.6 Real Interest Rates and International Capital Flows
Additional resources (4)
AP Macroeconomics - 2024 AP Macroeconomics Exam Guide
AP Macroeconomics - Unit 4 Overview: Financial Sector
AP Macroeconomics - Unit 5 Overview: Long-Run Consequences of Stabilization Policies
AP Macroeconomics - Unit 6 Overview: Open Economy-International Trade and Finance
Practice Questions (4)
What's the primary tool that the Federal Reserve uses to implement monetary policy?
What does the Federal Reserve do when it wants to increase the money supply as part of its monetary policy?
How does the Federal Reserve influence interest rates as part of its monetary policy?
What is the connection between monetary policy and exchange rates?
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About Us
About Fiveable
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Terms of Use
Privacy Policy
CCPA Privacy Policy
Resources
Cram Mode
AP Score Calculators
Study Guides
Practice Quizzes
Glossary
Cram Events
Merch Shop
Crisis Text Line
Help Center
© 2024 Fiveable Inc. All rights reserved.
AP® and SAT® are trademarks registered by the College Board, which is not affiliated with, and does not endorse this website.