Briefly Summarise the Process of Monetary Policymaking

question 19

Essay

Briefly summarise the process of monetary policymaking.

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Definitions:

Investment

is the allocation of resources, usually money, in expectation of earning a future return.

GDP Gap

The difference between the actual GDP and the potential GDP of an economy, indicating under-utilization or over-utilization of resources.

Government Bonds

Financial securities issued by a government to finance its budget deficits and various public sector projects.

Discount Rate

The interest rate charged by central banks for short-term loans to commercial banks, influencing monetary policy and economy liquidity.