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Monetary policy

Knowledge sheet with assignment

Monetary policy

Policy rate, economic development and inflation: a central bank’s decision-making process

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Updated on 02.06.2022

Latest change:

02.06.2022

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Overview

The six-page knowledge sheet explains the basic mechanism of monetary policy, the decision-making process behind it, and today’s unconventional monetary policy.

  • Students work through the topic by way of the associated worksheet.
  • For those wishing to delve further into the subject, six source texts are provided together with a brief introduction that puts them into context.

Learning objectives

The students are able to:

  • describe and explain the basic correlating effects of interest rates, inflation and economic development; 
  • name and describe the goals and the main instrument of conventional monetary policy;
  • describe the monetary policy decision-making process;
  • understand the challenges of today’s unconventional monetary policy and put them into context.

Knowledge sheet

Monetary policy

A central bank has a clearly defined mandate: It must pursue a monetary policy that serves the interests of the relevant country or currency area as a whole. Its primary goal is to ensure price stability.

Worksheet

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Worksheet

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Sample answers Worksheet

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Extras

Six source texts on the monetary policy of the Swiss National Bank (SNB)

For those wishing to gain further insights into monetary policy after having read the knowledge sheet on this topic (contained in the monetary policy unit), Iconomix has selected six source texts – studies, speeches and excerpts from SNB publications.

Additional information

Links

Videos

Conventional monetary policy
Unconventional monetary policy
Money creation

News on the topic

Units: news and updates
06.06.2022

Monetary policy unit: Knowledge sheet replaces MOPOS

Extraordinary times call for extraordinary measures: In the aftermath of the 2007/2008 financial crisis, monetary policy changed substantially – not just in Switzerland but worldwide. How can the functioning of today’s monetary policy be described in a way that captures these changes? A new Iconomix knowledge sheet provides an answer.

To the story

Credits for this unit

Concept: Iconomix

Authors: Pascal Meichtry, HEC Lausanne; Dr. Manuel Wälti, SNB

Educational proofreading: Dr. Petra Gerlach, SNB

Charts: clearbrand gmbh, Zurich

Translation & proofreading: SNB Language Services

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