Monetary Policy, Targets, and Goals
We have a general idea of what central banks do, and while we might not have confidence in their independence, they have confidence in their purpose, their expertise, and in their ability to use monetary policy to influence economic activity. Whether you agree with such goals and/or policies, you should better understand how the tools of monetary policy work and how they influence economic activity.
Central Banks Face a Balancing Act Too
By changing the size and composition of their balance sheets, central banks influence the money supply and cost of credit, thereby affecting economic activity. Like all economic entities, central banks have balance sheets that change as they acquire assets (things ...
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