559730
Monetary Policy
- Goal of inflation
- Low
- Stable
- Predictable
- Low
- Costs to have high inflation
- Reduce purchasing power of $
- Neg.affect ppl w/ fixed income
- Creates uncertainty (risk)
- Increase capital assets
- Reduce purchasing power of $
- Features of inflation control target policy
- Forward-looking
- Symmetry
- Flexible
- Recognition lag
Nota:
- Time to realize and recognize there is a problem
- Decision lag
Nota:
- Takes time to make a decision on which policy to implement
- Implementation lag
Nota:
- Takes time to implement that decision
- Recognition lag
- Forward-looking
- What determines the exchange rate?
- World prices for commodities?
- Economic performance relative to other countries
- Relative inflation rates
- Relative inflation rate
- Canada's productivity record
- Trade and current balances
- Public debt
- S-T capital flows
- World prices for commodities?
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