ECON 1100 Chapter Notes - Chapter 11: Nominal Interest Rate, Overnight Rate, Real Interest Rate
28 Mar 2016
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Econ 1100 chapter 11 notes monetary policy. Monetary policy- the acions the bank of canada takes to manage the money supply and interest rates to pursue the macroeconomic policy goals. Goals of monetary policy: price stability- keeping inlaion rate within 1-3%. Inlaion targeing is conducing monetary policy so as to commit the central bank to achieving a publicly announced level of inlaion. Symmetric inlaion targeing is conducing monetary policy based on equal concern about inlaion rising above its target as about inlaion falling below its target. The money market and the bank of canada"s choice of monetary policy targets. The bofc uses monetary policy targets which are variables that directly afect the inlaion rate. The two they typically use are the money supply and the interest rate. The demand for money depends on the interest rate, the lower the interest rate, the higher the quanity of money demanded. Interest rate is the opportunity cost of holding money.
