Monetary Policy Tools (HL only)
Demand Management (Monetary Policy)
AO2·HL
Syllabus requirement
Covers tools like open market operations, reserve requirements, interest rate changes, and quantitative easing.
Assessment objectives
AO2 Application and Analysis
Higher LevelThis topic is assessed at HL.
Summary
This topic introduces the monetary policy tools that a central bank or monetary authority uses to influence the money supply and interest rates. The IB syllabus identifies four such tools; two named in the extract are open market operations (OMO) and minimum reserve requirements (MRR). Understanding these tools is important because they are the primary means by which monetary authorities implement demand management and stabilise the economy.
