Podcast
Questions and Answers
What is the primary goal of quantitative methods in economics?
What is the primary goal of quantitative methods in economics?
- To regulate international trade agreements.
- To manage government spending on infrastructure.
- To control the money supply and bank credit. (correct)
- To influence consumer behavior through advertising.
Which of the following describes the nature of quantitative methods?
Which of the following describes the nature of quantitative methods?
- Universal
- Qualitative
- Compulsory
- Selective (correct)
What is influenced by raising the bank interest rate during inflation?
What is influenced by raising the bank interest rate during inflation?
- Credit expands
- Encourages borrowing
- Increases government spending
- Discourages borrowing (correct)
What happens when the bank interest rate is lowered during deflation?
What happens when the bank interest rate is lowered during deflation?
Against what do commercial banks grant loans according to the central bank's instructions?
Against what do commercial banks grant loans according to the central bank's instructions?
What does 'open market operation' refer to?
What does 'open market operation' refer to?
What does the central bank do if there is too much money in circulation?
What does the central bank do if there is too much money in circulation?
Which of the following is a direct effect of credit contraction?
Which of the following is a direct effect of credit contraction?
What is the primary aim of interest rate policy as a quantitative method?
What is the primary aim of interest rate policy as a quantitative method?
When does the central bank typically use open market operations?
When does the central bank typically use open market operations?
Flashcards
Quantitative Monetary Policy
Quantitative Monetary Policy
A method used to manage the total money supply and bank credit in the economy.
Interest Rate Policy
Interest Rate Policy
The interest rate at which commercial banks lend money, influenced by the central bank.
Open Market Operations
Open Market Operations
The central bank buys or sells government securities to influence the money supply.
Study Notes
- Quantitative methods regulate the total money supply and bank credit.
- These methods are selective.
Interest Rate Policy
- Commercial banks provide loans at an interest rate set by the central bank, based on high-quality securities.
- To combat inflation, interest rates increase, discouraging borrowing and contracting credit.
- To combat deflation, interest rates decrease, encouraging borrowing and expanding credit.
Open Market Operation
- The central bank buys and sells securities in the open market.
- In an inflationary context of excess money, the central bank sells securities.
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