From the course: Economics for Financial Advisors
Join today to access over 25,300 courses taught by industry experts.
Inflation and monetary policy
From the course: Economics for Financial Advisors
Inflation and monetary policy
- [Instructor] Part of this tightening up of the flow of liquidity is managed through interest rate policy. And I know what you're probably thinking, if this hydroelectric dam example is how the economy works, why do we have a dam at all? If more liquidity leads to more output, why not flood the economy with liquidity? GDP growth is a good thing after all, right? Well it is, but just like in other parts of life, sometimes too much of a good thing can have unintended consequences. In this case, that consequence is inflation. Inflation is something that everybody is familiar with, and it refers to the general increase of the cost of goods and services in a country. While a low amount of inflation in most growing economies is expected, and in most cases desirable, rapid inflation is a major concern that can have a significant impact on the economy and on people's standard of living. Just think about it. If your salary is fixed at a hundred thousand dollars a year and annual inflation is…
Practice while you learn with exercise files
Download the files the instructor uses to teach the course. Follow along and learn by watching, listening and practicing.
Download courses and learn on the go
Watch courses on your mobile device without an internet connection. Download courses using your iOS or Android LinkedIn Learning app.