Monday, April 30, 2018

Unit 4: Expansionary vs. Contractionary Monetary Policy

Expansionary vs. Contractionary Monetary Policy

Expansionary Monetary Policy – “Easy” Money (Recession)

-       Buy Bonds (Big Bucks)
-       RR ↓
-       DR ↓
-       FFR ↓
-       i ↓
-       Ig ↑
-       AD ↑
-       MS ↑
-       $ depreciate
Contractionary Monetary Policy – “Tight” Money (Inflationary)

-       Sell Bonds
-       RR ↑
-       DR ↑
-       FFR ↑
-       i ↑
-       Ig ↓
-       AD ↓
-       MS ↓
-       $ appreciate
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