Post
Topic
Board Economics
Re: Inflation and Deflation of Price and Money Supply
by
Luc9988
on 25/11/2018, 03:13:23 UTC

The core focus of Central bank is the inflation band.  If the economy is out of that inflation band, the central bank will either exercise the Monetary or Fiscal shocks  to put inflation back into the band  However, altering the nature dynamic of the economy will have a price to pay.  Usually the shock will change the direction of the exchange rate which in turns will affect wages, unemployment, the price ratios and interest rate and that affects the appreciation /deprecation of money.