Class Notes (808,038)
United States (312,889)
CAS IR 250 (26)
Lecture 29

CAS IR 250 Lecture 29: Monetary Policies

4 Pages
Unlock Document

Boston University
International Relations
CAS IR 250
Thomas Berger

International Relations in Europe Lecture 29 Lecture 29: Monetary Policies. Monetary policy: o Central banks control monetary supply; one of the ways they can do this is through the interest rates on its customers. Interest Rates: the interest rates of the banks, influence the interest rates of the economy these banks have a longterm influence on interest rates. Maximum Employment: two of the things these banks want to do is: maximize employment and control inflation. They control inflation rates through increasing the interest rates because then it becomes more expensive to borrow money, so companies are less likely to invest and people are less likely to spend. The MundellFleming Trilemma: o According to this theory, a country cannot achieve a free flow of capital, a fixed exchange rate and independent monetary policy simultaneously. The MundellFlemming Trinity: 1. Autonomy: managing the business cycle. 2. Minimum exchange rate stability. o Theres a tension between managing the business cycle (issuing government bonds) and maintaining the exchange rates.
More Less

Related notes for CAS IR 250

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.