ECON1020 Lecture Notes - Lecture 9: Opportunity Cost, Demand Curve, Money Supply
Document Summary
What is monetary policy: monetary policy: the actions taken by central banks (such as the reserve bank of australia) in the pursuit of macroeconomic goals. The goals of monetary policy, according to the reserve bank act, 1959: full employment of the labour force, stability of the australian currency, economic prosperity and welfare for the people of australia, the goals of monetary policy, cont. Since 1993 the reserve bank of australia (rba) has focused monetary policy mainly on achieving price stability. Inflation targeting: conducting monetary policy so as to commit the central bank to achieving a publicly announced level of inflation: the ba(cid:859)s ta(cid:396)get i(cid:374)flatio(cid:374) (cid:396)ate is (cid:271)et(cid:449)ee(cid:374) (cid:1006)% a(cid:374)d (cid:1007)% pe(cid:396) a(cid:374)(cid:374)u(cid:373), o(cid:374) a(cid:448)e(cid:396)age o(cid:448)e(cid:396) the (cid:271)usi(cid:374)ess (cid:272)(cid:455)cle. The money demand curve is downward sloping to show the inverse relationship between the interest rate on financial assets and the quantity of money demanded: the interest rate on financial assets is the opportunity cost of holding money.
