by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is Loose Monetary Policy? Loose monetary policy aims to stimulate an economy by lowering interest rates. What is Tight Monetary Policy? Tight monetary policy aims to slow down an overheated economy by increasing interest rates. Factors of Monetary Policy The...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What are Open Market Operations? The most common monetary policy tool in the U.S. is open market operations.These take place when the central bank sells or buys U.S. Treasury bonds in order to influence the quantity of bank reserves and the level of interest rates....
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is Quantitative Easing? The most powerful and commonly used of the three traditional tools of monetary policy—open market operations—works by expanding or contracting the money supply in a way that influences the interest rate. In late 2008, as the U.S. economy...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is Inflation Targeting? Inflation targeting is a central bank strategy of specifying an inflation rate as a goal and adjusting monetary policy to achieve that rate. Inflation targeting primarily focuses on maintaining price stability, but its proponents also...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is Countercyclical? Cyclicality of the fiscal policy simply refers to a change in direction of government expenditure and taxes based on economic conditions. These pertain to decisions by policymakers based on the fluctuations in economic growth. There are two...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Circular Flow Model? A good model to start with in economics is the circular flow diagram. It pictures the economy as consisting of two groups—households and firms—that interact in two markets: the goods and services market in which firms sell and...
