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Questions and Answers
What is the primary objective of the BSP's monetary policy?
What is the primary objective of the BSP's monetary policy?
Which of the following is not a key objective of monetary policy?
Which of the following is not a key objective of monetary policy?
What monetary policy instrument is primarily used by the BSP to influence the money supply?
What monetary policy instrument is primarily used by the BSP to influence the money supply?
How does contractionary monetary policy typically affect the economy?
How does contractionary monetary policy typically affect the economy?
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In what year did the BSP adopt the inflation targeting framework?
In what year did the BSP adopt the inflation targeting framework?
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What effect does adjusting interest rates have on borrowing costs?
What effect does adjusting interest rates have on borrowing costs?
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Which of the following would likely be a tool of expansionary monetary policy?
Which of the following would likely be a tool of expansionary monetary policy?
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What type of monetary policy does the BSP implement when inflation is forecasted to exceed target levels?
What type of monetary policy does the BSP implement when inflation is forecasted to exceed target levels?
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Study Notes
Monetary Policy Overview
- Central banks regulate the money supply to stabilize price levels.
- Key objectives: Price stability, full employment, and economic growth.
- Action measures include influencing the timing, costs, and availability of money and credit.
Inflation Targeting
- Bangko Sentral ng Pilipinas (BSP) aims to maintain price stability for balanced economic growth.
- Inflation targeting framework adopted in January 2002 to achieve this objective.
- BSP utilizes various monetary policy instruments based on inflation outlook assessment.
Primary Instruments in Monetary Policy
- Interest Rates: Adjusting rates influences borrowing costs and consumer spending.
- Open Market Operations: Buying or selling government securities affects overall money supply.
- Reserve Requirements: Adjustments in reserve amounts impact banks' lending activities.
Monetary Policy Strategies
- Contractionary Monetary Policy: Implemented when inflation forecasts exceed target levels to restrict money supply.
- Expansionary Monetary Policy: Aimed at stimulating the economy when inflation is under control, increasing money supply and encouraging spending.
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Description
This quiz explores the monetary policy employed by central banks with a focus on inflation targeting. Understand the measures and actions taken to regulate money supply and their impact on economic stability. Dive into key concepts and definitions relevant to this important economic strategy.
