AS.180.101 Lecture Notes - Lecture 13: Call Money, Deflation, Dennis Amiss
Document Summary
Lecture #13: money, central banks, and monetary policy (an overview) jon faust. Broad overview of money, central banks, and monetary policy. What is a central bank: a central bank is a governmental body at the center of the financial system that possesses powerful policy tools that can be used to loosen or tighten financial conditions. What is tighten financial conditions : the tools that the fed has can, 1. Cause interest rates to temporarily rise: 2. Cause asset prices to generally and temporarily fall. Prices on stock market, house prices, etc: 3. Cause lending conditions to become generally and temporarily more stringent. What is loosen financial conditions : opposite of tighten, interest rates to go down. From financial conditions to the economy: affecting financial conditions is not an end in itself, central banks are generally assigned the task of promoting 2 goals, 2 goals, low and stable price inflation.
