- CFA Exams
- Dec. 2020 Level 1
- Study Session 5. Economics II
- Reading 16. Monetary and Fiscal Policy
Reading 16. Monetary and Fiscal Policy
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Learning Outcome Statements
| Reading 16. Monetary and Fiscal Policy | |
|---|---|
| 1. What is Money? a. compare monetary and fiscal policy; b. describe functions and definitions of money; c. explain the money creation process; | |
| 2. The Demand for and Supply of Money d. describe theories of the demand for and supply of money; e. describe the Fisher effect; | |
| 3. The Roles of Central Banks f. describe roles and objectives of central banks; | |
| 4. The Objectives of Monetary Policy g. contrast the costs of expected and unexpected inflation; h. describe tools used to implement monetary policy; i. describe the monetary transmission mechanism; k. explain the relationships between monetary policy and economic growth, inflation, interest, and exchange rates; | |
| 5. Monetary Targeting Rules j. describe qualities of effective central banks; l. contrast the use of inflation, interest rate, and exchange rate targeting by central banks; | |
| 6. Contractionary and Expansionary Monetary Policies and the Neutral Rate m. determine whether a monetary policy is expansionary or contractionary; n. describe limitations of monetary policy; | |
| 7. Fiscal Policy: Roles, Objectives, and Tools o. describe roles and objectives of fiscal policy; p. describe tools of fiscal policy, including their advantages and disadvantages; q. describe the arguments about whether the size of a national debt relative to GDP matters; | |
| 8. Active and Discretionary Fiscal Policy r. explain the implementation of fiscal policy and difficulties of implementation; s. determine whether a fiscal policy is expansionary or contractionary; | |
| 9. Interrelationships between Fiscal and Monetary Policy t. explain the interaction of monetary and fiscal policy. |