Monetary Policy
Managed by a country's central bank (like the Reserve Bank of India in your case), it involves controlling the money supply and interest rates to manage inflation and stabilize the economy
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Supply: How much of a product or service is available to buy. Demand: How much of that product or service people want to buy. When supply is high but demand is low, prices go down. When demand is high but supply is low, prices go up
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Similar ideas to Monetary Policy
The Federal Reserve
The Federal Reserve does not want to start a recession because part of its dual mandate is to keep the economy healthy. But, the Fed's dual mandate also includes keeping inflation low. A cure for rising inflation is higher interest rates, which slows the economy.
For example, in 1981, ...
The John Law Economic System
The financial system in use today is a version of John Law’s system:
Each country in the developed world has a central bank that issues paper money, manages the supply of credit in the interest of commerce, uses fractional-reserve banking, and has joint-stock companies that pay dividends.
Federal Rates
The Fed rate is also tied to inflation, which impacts earnings, which affects consumer spending. Inflation also moves hourly wages and direct interest rates. This can create the impression that interest rates and consumer spending are more closely related than they are.
The Federal Reserve...
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