ECON 102 Lecture Notes - Lecture 24: 5, Value Engineering, Flowchart

• School: UBC
• Department: Economics
• Course: ECON 102
• Professor: Robert Gateman

Document Summary

Step ii m affects i-rate (flowchart: understanding bonds. Pv ~ 1/i-rate; pb = pv; thus pb ~ 1/i: reasons: i. ii. *this analysis is used to explain the speculative d for money: money demand. Monetary tm + increase i decrease i decrease ae decrease y: er transmission mechanism = foreign trade effect (lp) (mei) (ae) (ad) Monetary tm + increase i increase ev decrease netx decrease ae decrease y (lp) (er) (x,m) (ae) (ad: effectiveness of monetary policy, appendices. Decrease br decrease onr decrease i-rate increase l passive increase m. Methods used by boc to increase bank rate main tool: bank rate, mo, buyback operations fine tuning, shifting, announcement effect, monetary policy targets, lags in monetary policy, history of monetary policy. Step i: boc affects m-supply (boc pushes policy button) Step ii: m affects i-rate (m-policy) (money market) Step iii: i-rate affects ad and ye (transmission mechanisms)