Monetary policy1
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Monetary policy1

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    Monetary policy1 Monetary policy1 Presentation Transcript

    • http://powerpointpresentationon.blogspot.com
    •  
    • MEANING
      • Monetary policy is an instrument which effect the credit flow in an economy.
      • The variation effect the demand & supply of credit in an economy, and the level or nature of economic activities.
    • Objective
      • Stability in price level
      • Economic development
      • Arrangement of full employment
      • Expansion of credit facility
      • Equality & Justice
      • Stability in exchange rate
    • INSTRUMENTS
      • GENERAL (QUANTITATIVE) Methods
      • SELECTIVE (QUALITATIVE) Methods
    • GENERAL (QUANTITATIVE) Methods
      • Meaning:-
      • These methods help in credit control in the economy.
      • Affect total quantity of the credit.
    • Types
      • Bank rate policy
      • Open market policy
      • Cash reserve ratio
      • Statuary reserve ratio
    • Bank Rate policy
      • Traditional approach:- Bank rate means on which central bank discounts and rediscount the eligible bills.
      • Today’s approach:- Bank rate means the minimum rate on which central bank provides financial accommodation to commercial bank in the discharge of its function as the lender of the last resort.
    • Effect of Bank rate
      • Increase in bank rate
      • Increase in bank rate charge by the central bank on its advance to commercial bank.
      • Commercial bank increase the rate of interest on their loan.
      • Demand for the credits and loan decrease.
      • Flow of the money decrease in the economy
      • Use in inflationary situation
      • Decrease in bank rate
      • Decrease in bank rate charge by the central bank on its advance to commercial bank.
      • Commercial bank decrease the rate of interest on their loan.
      • Demand for the credits and loan increase.
      • Flow of the money increase in the economy
      • Use in depression situation
    • Open Market operation
      • Its include the sales and purchase by the central bank of ….
      • Assets
      • Foreign exchange
      • Gold
      • Government securities
      • Company securities
    • Use of Open Market operation
      • In the inflationary situation
      • Central bank decrease the money supply.
      • Central bank sale out the securities to commercial bank and control money supply.
      • In the depressionary situation
      • Central bank increase the money supply.
      • Central bank purchase the securities from the commercial bank.
    • Cash Reserve Ratio
      • Commercial bank has to keep a certain percentage of his deposits with central bank.
      • It control the cash flow in economy.
      • It keeps changes in monetary policy framed by central bank of a country.
    • STATUARY LIQUIDITY RATIO
      • Commercial bank is to keep a certain percentage of his deposit as liquid asset.
      • It control the cash flow in economy.
      • It keeps changes in monetary policy framed by central bank of a country.
    • Use of C.R.R. & S.L.R
      • In Inflationary situation
      • Increased the percentage of cash reserve ratio and Statutory liquidity ratio
      • It reduces the supply of money in an economy
      • In Depressionary situation
      • Decreased the percentage of cash reserve ratio and Statutory liquidity ratio
      • It increases the supply of money in an economy
    • Function of credit regulation the quantitative methods
      • For expansion of credit
      • Reduce the bank rate
      • Purchase of securities
      • Reduce the C.R.R.
      • Reduce the S.L.R.
      • For contraction of credit
      • Increase the bank rate
      • sales of securities
      • Increase the C.R.R.
      • Increase the S.L.R.
    • Specific or qualitative Credit Control
      • Adopt for expansion and contraction of credit to attain specific objective.
    • Methods of qualitative credit control
      • Credit rationing
      • Change in margin
      • Direct action
    •  
    • MEANING
      • Measures related to taxation & public expenditure are normally called fiscal measures and the policy concerning them as known as FISCAL POLICY.
      • In short, fiscal policy or budgetary policy consists of steps & measures which the government in order to fulfill the aims of economic policy.
    • Objective of fiscal policy
      • To achieve and maintain the full employment in the economy.
      • Attain Economic growth in long term.
      • Achieve economic stability.
      • To guide the allocation of existing resources into socially necessary lines of development.
    • INSTRUMENTS
      • PUBLIC EXPENDITURE
      • TAXATION
      • PUBLIC DEBT
    • PUBLIC EXPENDITURE
      • Meaning:-
      • Government spending
      • Productive
      • Non-Productive
    • Types
      • PUMP PRIMING
      • The government spending which will have the effect of setting the economy going on the way towards full utilization of resources.
      • Example:- Gov Expenditure, building infrastructure etc.
      • COMPENSATORY SPENDING
      • The government spending which will have the effect of setting the social objective and payment of interest on debt.
      • Example:- schools, hospitals, pensions, relief payments etc.
    • EFFECT
      • Gov. exp should be reduced in inflation and increased during depressions in case of a deflationary situation in an economy. Therefore it act as a balancing factor between saving & investment
    • TAXATION
      • Meaning:-
      • Source of Revenue
      • Helps Gov. to do there exp.
      • Generated from public
    • Types of Tax
      • Direct Tax
      • Direct tax are those tax which a person pay to government directly for himself and can not enforce on other.
      • For example:- income tax, wealth tax etc.
      • Indirect tax
      • Indirect tax are those tax which a person can on others.
      • For example:- service tax, sales tax.
    • Effect of Taxation
      • Reduction in taxation
      • Increase the disposable income.
      • Increase the consumption power.
      • Use for offsetting the deflation forces
      • Increase in Taxation
      • Decrease the disposable income.
      • Decrease the consumption power.
      • Use for offsetting the inflation forces.
    • Public Debt
      • When Gov. exp. are more then Gov. revenue Government take Public Debt.
      • Deficit financing = Gov. exp. – Gov. revenue.
      • Government take the public debt to fulfill the gap between the Gov exp and the revenue.
    • Types of public debt
      • Borrowing from public
      • Borrowing from commercial bank
      • Issue of new currency
    • Effect
      • Public Debt effect the inflation and deflation
      • If government take the borrowing from public and banks it will decrease the cash flow in the market and increase the deflation.
      • If there is depression in economy government repay the debt the public which increase the cash flow of the money in market.
    • Some facts and figures
      • Monetary policy is been framed by……………
      • Fiscal policy is been framed by………………
      • Present governor of R.B.I……………………
      • Present Finance minister of India……………….
      • Current S.L.R…………………….
      • Current C.R.R…………………..
      • Monetary policy in India framed under which act……………………….
    •