2.6.2 Monetary Policy (Edexcel A-Level Economics Teaching PowerPoint)

This teaching powerpoint for Edexcel covers Monetary Policy.

Monetary policy refers to the actions taken by a central bank, like the Bank of England or the Federal Reserve, to influence the economy by changing the money supply and interest rates. For example, when the economy is sluggish and inflation is low, the central bank may pursue an expansionary monetary policy, which would involve increasing the money supply and lowering interest rates. The goal is to boost economic activity and encourage spending. Conversely, when the economy is overheating and inflation is high, the central bank may pursue a contractionary monetary policy, which involves decreasing the money supply and raising interest rates.