Under monetary policy, one understands the adjustment of money supply. This is done in order to either “achieve some combination of inflation and output stabilization” (Mathai, 2009) or, more generally, to target either a certain level of a specific (nominal) interest rate - the refinancing rate - or the monetary base (Bofinger et al., 2001, pp. 63). The latter defined objective of monetary policy is more general as it lets open the question whether and if so, how monetary policy affects the real sphere measured by macroeconomic variable such as Gross Domestic Product (GDP) and the unemployment rate.
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