125220_16(T10): Monetary Policy in New Zealand

  1. For any modern economy, four economic goals
    • Avoid excessive inflation
    • Maintain full employment
    • Achieve sustainable economic growth-economic prosperity
    • Achieve a stable currency & strong international payments position
  2. The Major Banks & the Creation of Money
  3. Monetary policy
    • Concerned with control of amount of money in circulation i.e. money supply & its growth
    • Used (along with fiscal policy) to prevent wide swings from high peaks to low troughs in business cycles
  4. Overview of monetary policy
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  5. Relationship between Central Banks and Governments around the world
    Govt sets monetary policy & central bank implements it. Case in NZ up to 1986.

    Govt sets monetary objectives within certain constraints - central bank free to achieve objectives. Case in NZ now.

    Monetary policy objective set in legislation - central bank free to follow whatever course of action it sees fit to achieve objective
Card Set
125220_16(T10): Monetary Policy in New Zealand