Monetary Policy

Monetary policy is the actions taken by the central bank of a country to manipulate liquidity, i.e. the amount of money available in the economy. Such actions include modifying the interest rates, bank reserves, etc. To illustrate, let’s suppose that you have the responsibility of controlling the market of a certain product in a country. In this market, manufacturers have a certain rate of production capacity. Furthermore, you can control and change the amount of money that buyers have and therefore you can affect their purchasing power. If you aim to empower the market of the country, you must take...