What is Monetary Policy? | Explained | IB Macroeconomics | IB Economics Exam Review

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Brad

[paultonykajemba]

I am an economics student, in my first year, I wanna learn more about my course

[jingayandyani]

took the quarantine period as some time to refresh on my economics lessons. finally understood what our professor failed to teach us from this video, thanks!

[abubakaryaseer]

Thank you sooo very much.
I had a lecture yesterday on macro economic and this short video just helped alot.

[shruthi_sunshine]

Your videos are crisp and to the point.!! Really helpful for understanding the basic concepts. Thank you so much.!!

[yarenzorlu]

thankyou for helping a student out here

[CorrinaMusic]

Really appreciating these videos - currently in quarantine and studying a BA in Business Management, and struggling to stay motivated, but these videos are helping!

[hmj]

What can be a little confusing is that it seems the overall goal is to affect the money supply. The overal money supply is the economic guage and to affect the money supply the Fed raises/lowers interest rates, or buys bonds.

[masomelelemgijima]

Simple and straight to the point. Thank you

[tamannajuthi]

This video is very useful for me.Thank you for making such a beautiful content.

[rushdaa]

This was so easy to understand thank you.

[KonstantinosTsimikas]

i cant explain how good and helpful it is

[drainedgaia]

the increase in economical growth rate is a bad thing if it's not accompanied by a respective increment in production and thus leading to inflation, right ?

[dilfuzaabdul]

you are great, better than our univer preofessor's lectures with ppt.. keep going on!!

[judyannvillegas]

What book do you use sir? Just for reference. Thank you

[ogbonny]

Very clearly explained thank you so much

[arunaananda]

Many thanks, for the clear and concise explanation.

[trdvlly]

Brilliant video Sir👍👍 up to the point.

[spicyshizz]

Brad I was wondering, around 2008 There was the economic stimulus act is that at all Monetary policy or is that socialism??

[justinemaemayores]

What is the examples of how monetary policy performs in sustaining the economic flow of the country?

[karfar]

Monetary policy is determining or controlling the cost to obtain credit.

Using the tools provided to it, the Fed controls the cost to obtain credit. They do not control the money supply but do influence it. Most of the money supply is bank credit and controlling the cost to obtain that credit influences the supply of it. Monetary policy does not control, in any way, the net supply of government liabilities.

Banks have two accounts with the Fed, a securities account and a reserve account. Moving a sum of government liabilities from a bank's securities account to the bank's reserve account is not printing money or increasing the overall supply. It is simply changing the form of the government's liability. Monetary policy is not the creation or destruction of money, that's fiscal policy.

Securities can only be purchased with reserves. Converting those securities back to reserves is not money creation. The creation of reserves only occurs through fiscal policy.

Lower rates incentivizes borrowing. Higher interest rates increase costs (inflation) and disincentivize borrowing. The cost of credit is reflected in the cost of all goods and services. So, increasing the cost to obtain credit will, of course, results in inflation.