Issues with monetary policy

Euro currency

Here we continue our exploration of monetary policy, turning our focus to issues around monetary policy and other macroeconomic factors. These issues include time orientations, lender reluctance, and the liquidity trap. You will also look at short-run equilibrium and trade-offs between inflation and unemployment, as demonstrated through the Phillips curve. Finally, we will consider complex or unconventional policies that attempt to control or stabilize the financial system in the economy.

Objectives

Upon successful completion, you will be able to:

• describe how crowding out occurs and its connections to fiscal and monetary policies;
• discuss the arguments for side supply approaches to economic growth separating macroeconomic and microeconomic variables;
• describe the key components of the monetarist perspective; and
• explain why the Phillips curve is vertical in the long run.