ECO Lecturer Dr. Who controls monetary policy? How does monetary policy work? What can monetary policy accomplish? A simple theory of money- The Quantity Theory of Money (QTM). What is monetary policy? Typically we consider the problem of how the government can manipulate monetary policy so as to control economic variables such as output, inflation, interest rates, etc. Issues: how monetary policy can “stabilize” the economy? How will monetary policy affect interest rates or exchange rates? We want to use our AD-AS model to discuss monetary policy and its effects. Who is this man? Who is this man? Who is more important?