What are the objectives of monetary policy?

Distinguish between expansionary and contractionary monetary policy.

Why do you think expansionary monetary policy is also called an ‘easy monetary policy’?

Why is contractionary monetary policy also known as a ‘tight monetary policy’?

What are the components of aggregate demand that monetary policy can influence?

Using diagram, show how the government can use monetary policy when there is a recessionary gap

Define term a

Define term b

Define term c

Define term d

Define term e

Easy monetary policy may be ineffective in a recession.

Counter-cyclical monetary policy involves lowering interest rates in the upswing of the business cycle and raising interest rates in the downswing.