Monetary policy
Definition. Monetary policy is the use by a central bank or monetary authority of instruments such as the interest rate, the money supply or, in Singapore case, the exchange rate, to influence aggregate demand and achieve macroeconomic aims such as low inflation, full employment and stable growth.
In most economies an expansionary monetary policy lowers interest rates to boost consumption and investment, while a contractionary stance raises them. In Singapore the same goals are pursued by managing the trade-weighted exchange rate.
This term belongs to Monetary Policy in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
Want to use monetary policy for marks in the exam? Learn it in class or message the team.