UK Monetary Policy: Does it Work

The main instrument of UK monetary policy is the use of interest rates, set by the MPC. The theory is that interest rates are very effective in controlling inflationary pressures. The relative success of meeting the government’s inflation target in the past 7 years suggests that this proves the effectiveness of monetary policy.

In brief raising interest rates helps to reduce Aggregate demand in the economy. When interest rates are raised several things are affected. Firstly those with mortgages have higher monthly payments, this reduces their disposable income and reduces their spending. Secondly there is an increased incentive to save money rather than spend. Thirdly those who have other forms of borrowing will be hit with increased interest repayments, it will also discourage people from buying on credit. Therefore in principal raising interest rates will reduce demand and prevent the economy from overheating. This enables inflationary pressures to be subdued.

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Scheduling Your College Application Tasks

Here’s a list of application tasks that college-bound high school students should pencil into their calendars for the spring semester of their junior year and the fall semester of their senior year:

The SAT and ACT: The spring of your junior year is an excellent time to take the SAT Reasoning Test or the ACT. You’ll get your scores in plenty of time to use them in your college selection. If your scores match those of students who were recently admitted to your target schools, you can rest easy and turn your attention to other application tasks. If your scores fall below that mark, you’ve left yourself plenty of time to take the test a second time.

SAT Subject Tests: A number of selective schools either require or encourage applicants to submit scores from 2 or 3 SAT Subject Tests (formerly known as SAT IIs) in addition to their SAT or ACT score. Look into the requirements for your target schools now, so you’ll know what tests you need to take, and then visit the College Board website to find out what dates you can take the tests on. SAT Subject Tests are given on most, but not all, of the same test dates that the SAT Reasoning Test is given on. Not all Subject Tests are available on all test dates.

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Monetary and fiscal policy switching.

Two THEMES RUN through policy analysis: rules determining policy choice are functions of economic conditions; those rules may change over time. The themes reflect the views that actual policy behavior is purposeful, rather than arbitrary, and that good policy adapts to changes in the structure of the economy or to improvements in understanding how policy affects the economy.

A growing body of evidence finds that policy reaction functions vary substantially over different periods in the United States. In light of this evidence of regime shifts, which is reviewed in Section 1, it is surprising that there is little formal modeling of environments where ongoing regime change is stochastic, and the objects subject to change are parameters determining how the economy feeds back to policy choice.

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