8. The money
supply
Interest
rates
Monetary policy is the process by which
the monetary authority of a country controls
the supply of money, often targeting a rate
of interest for the purpose of
promoting economic growth and stability.
14. Monetary policy can contribute to the allocative
efficiency of the capital market and thus increases the
incentives to invest
15.
16.
17.
18. 1) Definition
Nominal anchor = a nominal variable such as the
inflation rate or the money supply which ties down the
price level to achieve price stability.
19. 2) The role of a Nominal Anchor
1
• Maintain money value
2
• Promote price stability
3
• Limit the time-inconsistency
problem
20. 1) Definition
Time inconsistency problem is something we deal with
continually in everyday life. We often have a plan that we
know will produce a good outcome in the long run, but
when tomorrow comes , we just can’t help ourselves and
we renege on our plan, because doing so has short-run
gains.
22. 1
Even if a central
bank recognizes
that discretionary
policy will lead to
a poor outcome
2
It still may not be
able to pursue the
better policy of
inflation control
3
Because politicians
are likely to apply
pressure on the
central bank to try
to boost output
with overly
expansionary
monetary policy
24. Monetary policy: chính sách tiền tệ
Goal: mục tiêu
Price stability: ổn định giá
Regulation: quy tắc
Impact: tác động
Committee: ủy ban
Determine: xác định
Maintain: duy trì
Combat: chống lại
Expansionary policy: chính sách mở rộng
Contractionary policy: chính sách thắt chặt
25. Nominal anchor: neo danh nghĩa
Adherence: giữ vững
Narrow: hẹp
Discretionary policy: chính sách tùy ý (tùy nghi)
Pursue: theo đuổi
Expected constraint: giới hạn kỳ vọng
Time – inconsistency problem: vấn đề thời gian
không thống nhất
Recognize: nhận ra
Pressure: áp lực