Monetary Policy

Monetary Policy
Monetary Policy at the Local and Federal Level & Impact in a Recession
Monetary policy, in the short run, has an impact toward the demand for goods and services. That is, monetary policy has a distinct influence over
inflation and other economic factors, not only at the federal level, but at the state and citywide levels. Monetary policy will influence the financial
conditions facing firms and households in the environment, even at the micro level. Thus, employees who produce goods and services are impacted, as
is the demand for those goods and services. When monetary policy imposes changes, the financial conditions that affect the economic activity in
specific sectors are influenced as well. The federal government, through fiscal policies ... Show more content on Helpwriting.net ...
Of course, this is felt throughout the entire economy, at the state and local levels, and in macroeconomics at the federal level. Individuals are
dramatically impacted when stocks rise or fall. The focus is on when stocks fall and there is a crippling impact on the individuals and their financial
worth. During a recession, the stock market has likely fallen, where one may notice the impact throughout the local environment as individuals struggle
to compensate for their losses. Therefore, one is likely to see monetary policy in order to make adjustments and fix what is out of alignment in the
economic
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Effect of Monetary Policy in Nigeria
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION 1.1 Background of the study 1.2 Statement of the problem 1.3 Objectives of the study 1.4 Research Question 1.5
Research Hypothesis 1.6 Significance of the study 1.7 Scope of the study 1.8 Organization of the study 1.9 Definition of terms.
CHAPTER TWO: LITERATURE REVIEW 2.1 Theoretical framework 2.2 Concept ofmonetary policy 2.3 Instrument of monetary policy 2.4
Monetary policy and inflation control 2.5 Problems associated with inflation control
CHAPTER THREE: RESEARCH METHODOLOGY 3.1 Research Design 3.2 Sources of data collection 3.3 Method of Data collection 3.4 Technique
of Data ... Show more content on Helpwriting.net ...
The direct monetary control measures used after the deregulation era were adopted, yet the effectiveness of these various control approaches has been
undermined by some inherent problems.
1.2 STATEMENT OF THE PROBLEM
Relative price stability is one of the main goals of monetary policy. Stable price level should be able to stimulate economic growth and development.
It is in recognition of this that government at all times design appropriate measures as well as monetary institution with authority to formulate and
implement policies aim at maintaining stable price level so as to achieve set macroeconomic objectives. The central bank of Nigeria is the apex
monetary authority that formulates and implements monetary policy in Nigeria aim at achieving stable price. Given the number of years the central
bank had been in existence and of numerous monetary policy measures, one will expect that domestic price could have been relatively stable.
However, inflation has continued recently to be a leading topic in Nigeria families and press as its effect penetrate more deeply into the nations despite
monetary policy measure by the relevant monetary authorities hence the need of this study of determine the effect of monetary policy on the control of
inflation in Nigeria.
1.3 OBJECTIVES OF THE STUDY
The basic objectives of this study is to

Fiscal and Monetary Policy
Governments can use both fiscal and monetary policies to move the economy from a recessionary or expansionary gap. Fiscal policies include
increased or decreased government spending, increased or decreased taxation; on the other hand monetary policies include increased or decreased
money supply, changes in interest rate, etc.
One of the tools of fiscal policy is government spending, the initial equilibrium is represented by the point E. With increased government spending, the
IS curve shifts to the right and new equilibrium is reached at point E', with increased level of output and higher interest rate.
Monetary policy can help the economy back to the long run equilibrium. Let the initial equilibrium ... Show more content on Helpwriting.net ...
However, in the long run this trade off might not exist as In the long run, expected inflation adjusts to changes in actual inflation, and the short–run
Phillips curve shifts. As a result, the long–run Phillips curve is vertical at the natural rate of

Discretionary Monetary Policy Is The Monetary Authorities...
Discretionary monetary policy is the monetary authorities based on the current economic situations and relevant macroeconomic objectives to achieve
economic targets through appropriate tools (such as open market operations and the discount rate etc.) to operate expansion or tightening monetary
policies(Barro, 1990). This essay will first introduce the optimal discretionary monetary policy and then investigate the role of supply shock in that
policy. Afterwards, analyze the implication of the supply shock in discretionary model and how it helps the EuropeanCentral Bank's (ECB's) responds
to 2007–2008 financial crisis. And finally conclude the relationship between the implication of discretionary theory with shock and the real responds to
... Show more content on Helpwriting.net ...
That is the output is lower than the natural rate of output, so CB plays a role to push up output level to the efficient level. Another explanation is that
the candidates of political election make pressure to expand the economy in order to improve the possibility of success. This loss function includes
the variance of output and thus CB has the role of stabilizing the economy. The aggregate supply is simply defined by Lucas island model in this
essay: . is the private agency expectation for inflation, is the aggregate supply shock with mean 0 and constant variance . Then rearrange supply
function, we obtain the short–run Phillips Curve (PC) . This illustrates in Figure 1. The order of discretionary policy model is significant. First, the
private agency determines nominal wage through their inflation expectation. Then the policy makers determine the inflationafter observing the supply
shock. It means that this policy makes reaction for that supply shock. This additional information advantage makes the CB plays an important rule of
stabilization. It also explains why it is more frequent to change monetary policy than change nominal wage and price. This means that the CB makes
reaction to supply shock before the private agency's modification for nominal contract. If there is no supply shock (), solve the Lagrangian to

Monetary Policy of Bangladesh
Monetary Police
Monetary policy is the term used by economists to describe ways of managing the supply of money in an economy. Monetary Policy is the
management of money supply and interest rates by central bank to influence prices and employment for achieving the objectives of general economic
policy. Monetary policy works through expansion or contraction of investment and consumption expenditure.
According to Paul Einzig
"Monetary policy includes all monetary decisions and measures irrespective of whether their aims are monetary and non–monetary, and all
non–monetary decisions and measures that aim it affecting the monetary system."
According to Harry G. Johnson
"Monetary policy employing the central bank's control of supply ... Show more content on Helpwriting.net ...
For developing economies like Bangladesh with significant underemployment/under exploitation of production factors, stimulating higher growth is
imperative for rapid reduction and eventual elimination of endemic poverty, and is therefore an overriding priority. The stimulus provided by monetary
policies in accommodating the growth aspirations must not however over step towards macroeconomic imbalance destabilizing and jeopardizing future
growth; and the pursuit of monetary policies comprise the continual balancing act of supporting the highest sustainable output growth while adjusting
smoothly to internal and external shocks that the economy encounter from time to time.
The primary objective of the Monetary Policy of Bangladesh is to outline the formulation and implementation of monetary policy of the Bangladesh
Bank (BB), and to convey its assessment of the recent and the expected monetary and inflation developments to the stakeholders and the public at large.
The Bangladesh Bank Order of 1972 outlines the main objectives of monetary policy in Bangladesh, which comprises– в– To achieve the price stability.
в– To regulate currency and reserves.
в– To promote and maintain a high level of production, employment and real income, and economic growth, since independence BB operated under a
variety of pegged exchange rate systems amid capital controls.

в– To manage the monetary and credit system.
в– To maintain the

RBA Monetary Policy
The government may also use monetary policy in order to contain economic growth. Monetary policy refers to changes in interest rates in order to
influence aggregate demand and economic activity. Monetary policy is conducted by the Reserve Bank of Australia, who use domestic market
operations in order to change interest rates. If the RBA takes a loose monetary policy stance the RBA will purchase Commonwealth Government
Securities in secondary bond markets. This increases the cash in the markets, and therefore pushes the overnight cash rate down. Interest rates will be
lowered, which will result in higher consumer demand as the cost of interest on mortgages and credit card repayments will decrease. On the other hand
a tight monetary stance results ... Show more content on Helpwriting.net ...
Microeconomic policies promote the efficient operation of markets as the most effective mechanism for achieving efficient allocation and use of
resources, raise productivity and increase aggregate supply. Increased aggregate supply will result in decreased inflationary pressures and increased
international competitiveness as Australian producers are able to supply international markets with a greater volume of goods at lower prices. Greater
export earnings will consequently improve Australia's terms of trade, and will decrease the current account deficit. Microeconomic reforms that
promote increased competition in both domestic and international markets will also encourage greater innovation and cheaper product, which will
benefit consumers. Increases in productivity and aggregate supply will also result in improvements in labour productivity. Higher productivity and
greater export earnings will result in wage increases for Australian labour, and subsequently living standards will improve. As a result of higher wages,
aggregate demand will increase thus creating further opportunities for increases in

Fiscal Policy And Monetary Policy
Nowadays, economic growth and stability is the goal that governments aim to achieve. There are two main ways to achieve this purpose: fiscal policy
and monetary policy. Monetary policy is a kind of macroeconomic policy lead by the central bank. Expansionary monetary policies can help boost the
economy but it will cause inflation. There are two approaches to control money supply; there are price and quantity. Price represents interest rates and
quantity means amount of money quantity. After financial crisis, U.S. interest rates already reached a low point. As a result, the only effective way to
boost the economy was by increasing money supply. In other words, the U.S. government would printed money and bought bonds in the open market.
New funds would entered the open market to boost economy, that is called "Quantitative Easing" monetary. Concern the U.S. dollar was the most
powerful currency in the world, U.S. monetary policy could affect the whole world. There were three rounds of Quantitative Easing monetary in the
U.S. In QE1, the Federal Reserve (Fed) purchased 1.25 trillion dollars of residential mortgage–backed securities, $ 300 billion long–term Treasury
bonds and $ 175 billion agency debt purchases between December 2008 and March 2010.The U.S government injected capital to major banks in
order to reduce the impact of the financial crisis. The Federal Reserve purchased $600 billion of longer–term Treasury securities in QE2 during the
period of November 2010 to June

Simulationary Monetary Policy
Asymmetry in the credit markets result in a wedge between the costs of external funds (i.e. from banks and other lenders) to the public, and the cost of
internal funds. Thus, internal funds, bank loans and other sources of financing are imperfect substitutes for firms. These imperfections related to credit
market frictions causes monetary policy changes to affect both the bank–lending channel and the balance sheet channel citep{Gertler1995}.
The bank–lending channel underpins the role of banks as financial intermediaries, as their business structure is designed to serve certain type of
borrowers, being small to mid–sized enterprises and households, where the problem of asymmetric information emerge citep{stiglitz81}. According to
the theory, ... Show more content on Helpwriting.net ...
The risk–taking channel is thought to operate via three main mechanisms. First, the search–for–yield mechanism, with low (nominal) interest rates
increasing incentives for banks to take on more risk citep{Rajan2005}. The second mechanism relates to the impact of low interest rates on real
valuations, incomes, and cash flows. Low rates boost asset and collateral values while tending to reduce price volatility, which in turn downsizes the
banks estimated probability of default, implying the belief that the increase in asset values are sustainable, encouraging both borrowers and banks to
accept higher risk positions citep{Borio2012}. Third, monetary policy also affects risk–taking through the reaction function of the central bank to
negative shocks. The commitment of a central bank for lower (future) interest rates in the case of a threatening shock reduces the probability of large
downside risks, thereby encouraging banks to assume greater risk.footnote{This effect, also known as the Greenspan or Bernanke put, operates
through the textit{expected} lower interest rates rather than textit{current} low rates themselves. Its magnitude, however, depends on the current
level of the policy rate. Anticipated interest rate reductions tend to correspond to a higher risk position when there is

Monetary Policy Essay
Monetary Policy Monetary Policy The Economy is the backbone to society. There are many factors that operate in, and govern our society's economical
structure. Factors such as scarcity and choice, opportunity cost, marginal analysis, microeconomics, macroeconomics, factors of production, production
possibilities, law of increasing opportunity cost, economic systems, circular flow model, money, and economic costs and profits all contribute to what
is known as the economy. These properties as well as a few others, work together to influence the economy. Microeconomics and Macroeconomics are
two major components. Both of these are broken down into several different components that dictate societal norms and views. "Microeconomics...
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Usually this goal is "macroeconomic stability" – low unemployment, low inflation, economic growth, and a balance of external payments. Monetary
policy is usually administered by a Government appointed "Central Bank", the Bank of Canada and the Federal Reserve Bank in the United States."
(Federal Reserve Bank of San Francisco, 2007). Monetary policy effects the GDP inflation. "Between 1996 and 2000, real GDP in the United States
expanded briskly and the price level rose only slowly. The economy experienced neither significant unemployment nor inflation. Some observes felt
that the United States had entered a "new ear" in which business cycle was dead. But that wishful thinking came to an end in March 2001, when the
economy entered its ninth recession since 1950. Since 1970, real GDP has declined in the United States in five periods: 1973–1975, 1980, 1981–1982,
1990–1991 and 2001." (McConnell & Brue, 2004). Unemployment Rates The unemployment rate is also affected by monetary policy.
"Unemployment that is above the natural rate involves great economic and social costs." (McConnell & Brue, 2004). GDP GAP and OKun's Law.
McConnell and Brue define this as "when the economy fails to create enough jobs for all who are able and willing to work, potential production of
goods and services

Monetary Policy Paper
Introduction
Fiscal and monetary policies focus on quickly returning the economy to sustainable, healthy growth. Any type of fiscal relief package will boost
consumer and business spending and can augment the nation's long–term growth potential. Expansionary monetary policy can stimulate growth and
provide insurance against the possibility of deflation. This paper will present information on four topics: (1) tools used by the Federal Reserve to
control the money supply, (2) how these tools influence the money supply and in turn affect macroeconomic factors? (3) how money is created? (4)
recommended monetary policy combinations that best achieve a balance between economic growth, low inflation, and a reasonable ... Show more
content on Helpwriting.net ...
Tools used by the Federal Reserve to control money supply?
On The Federal Reserve Web site"The major tool the Fed uses to affect the supply of reserves in the banking system is open market operationsВ—that
is, the Fed buys and sells government securities on the open market. These operations are conducted by the Federal Reserve Bank of New York. When
the Fed wants the funds rate to rise, it does the reverse, that is, it sells government securities. The Fed receives payment in reserves from banks, which
lowers the supply of reserves in the banking system, and the funds rate rises" (http://www.frbsf.org/publications/economics/letter/2004
/el2004–01.html#subhead2).
Another tool the Fed uses to affect the supply of reserves The Fed can't control inflation or influence output and employment directly; instead, it affects
them indirectly, mainly by raising or lowering a short–term interest rate called the "federal funds" rate. Most often, it does this through open market
operations in the market for bank reserves, known as the federal funds market (http://www.frbsf.org/publications/economics/letter/2004
/el2004–01.html#subhead2).
The Fed can also use discount interest rate decreases as way of controlling money: The Fed can lower the discount rate and lower the costs for banks
holding low excess reserves which will lower the excess reserve rate. If the Fed lowers the

According to the simulation, there are three key economic tools used by the Federal Reserve to control the monetary policy. 1. Spread between the
Discount Rate and the Federal Funds Rate 2. Required Reserve Ratio 3. Open Market Operations
These economic tools influence the money supply in the following ways:
1.Difference in Discount Rate and Federal Funds Rate:
Banks are able to borrow from the Fed if the discount rate charged by the Fed is lower than the federal funds rate charged by other banks. As the
discount rate is decreased, banks shift their source of borrowing from other banks to the Fed. As they do so, the total amount of money in the system
is increased. If the spread is positive, banks will always borrow from other ... Show more content on Helpwriting.net ...
2.Inflation Rate:
While increasing the money supply is a good sign for the GDP, it is not the same for inflation. With the increase, the nominal value of money stays the
same, but the increase in money continues to chase the same quantity of goods and servicesВ…thus the real value of money is decreased. The result is
prices go up.
3.Unemployment Rate:
The unemployment rate reacts to the GDP. When investment and spending increase, demand and employment opportunities tend to go up due to labor
requirements for production of goods and services. This increase causes a decrease in the unemployment figures. When money is reduced in the
system, causing a decrease in the GDP, the employment opportunities and demand for workforce will fall increasing the unemployment rates.
Monetary Policy
U.S. monetary policy affects all kinds of economic decisions people make in this country as well as others. Whether it is to get a new loan for a
brand new car, that new home for upstart family or to begin a new entrepreneur company, loans are a part of everyday life. Loans are not the only
items driving the economic decisions, take for instance the money one puts in the bank or in bonds, some may even look to invest in the stock market.
Because the U.S. is the largest economy in the world, its monetary policy can significantly affect financial endeavors in other countries.
The purpose of

The Consequences Of Monetary Policy
Monetary policy has to do with the regulations that a government puts in place to control money in circulation in the economy. An effective monetary
policy will ensure that current and anticipated events in the economy of a country are taken care of. The Federal Reserve (The Fed) is the central bank
of the United States, and it is responsible for the formulation and execution of these policies.
Banks made available huge amounts of money available in form of loans; banks were responsible for creating large debts in form of loan interests.
People who had borrowed were eventually unable to pay. The creation of private credit and money led to a financial crisis, threatening to make banks
bankrupt. The same banks now became weary of lending ... Show more content on Helpwriting.net ...
Lenders felt the burden left by defaulters and their capital reduced.
Subprime borrowers are those borrowers who have low credit ratings and poor creditworthiness. The subprime mortgage market meltdown began on 9
August 2007 and continued into 2008 (Cecchetti, 2008). It arose when banks created a lot of money in a short time and used the opportunity to raise
house prices and speculations on financial markets. Initial subprime mortgages were affordable and many borrowers were attracted to them. However,
they were adjustable after a given duration. It is this adjustment that instigated many defaults in payments, mostly beginning in 2007 when higher
payments were demanded. By 2009, banks were going bankrupt due to the high number of defaulted mortgage payments.
Also, lenders came up with creative mortgage packages upon speculations of growing house prices. With mortgage–backed securities (MBS), the
process of securitization occurs whereby home mortgages are grouped into categorized pools by the issuing banks. They are then sold as a single
security where the risks are spread out. These pooled assets–backed securities were attractive to both lender and borrower because lender sold the loan
and borrower accessed credit easily. Such collateralized debt obligations (CDOs) were sold to other market investors to reduce the risk of default.
These investors were attracted by the higher returns, especially due to the lower interests. During the liquidity period, as

Essay on Monetary Policy
Introduction
Monetary policy is among the many tools used by a national government to manipulate its financial system. Monetary policy refers to the method used
by the financial authority of any country to control the supply and availability of money (Woelfel, 1994). It is often targeted at interest rates to achieve
lay down objectives directed towards economic growth and stability (Woelfel, 1994). Monetary policy rests on the link between interest rates in an
economy, that is, the relationship between interest rates and the total money supply. It employs a variety of methods to control outcomes like inflation,
economic growth, currency exchange rates and unemployment.
Monetary policy can either be expansionary policy in which case ... Show more content on Helpwriting.net ...
One of these approaches is quantitative easing (QE). Quantitative easing is a technique used by central banks to boost money supply in an economy
when interest rates are close to or at zero thus cannot be reduced further (Woelfel, 1994). To increase the supply of money under such conditions, the
central bank may be forced to buy government assets/securities like government bonds, mortgage–backed securities or government debt from banks
thus increase their surplus revenue hence raise or stabilize prices of such securities and consequently reduce interest rates in the long term.
With this insight in mind, the remaining part of this essay seeks to critically examine the methods of implementing monetary policy when interest rates
are close to or at zero.
Monetary Policy Options at the Zero Bound
Interest rates have the lowest bound at zero mark. When this limit is reached, serious problems occur in designing appropriate monetary policy
approaches since interest rates can never be set below this mark. Countries like Japan, United States and Switzerland have faced this challenge in the
recent past thus calling for alternative approaches to monetary policy when the nominal interestrate is close or at zero.
Conventional monetary policy methods are always channeled towards lowering interest rates to stabilize inflation and other outputs. This is however
impossible in situations whereby the interest rates are already close to or zero calling for

Monetary And Fiscal Policy : Monetary Policy
Monetary and fiscal policy
Introduction
Fiscal policy is defined as the power that the federal government poses that enables it to impose taxes and also spend to achieve its goals in the
economy. On the other hand, the monetary policy is maintaining the programs that try to increase the nation's level of business through regulation the
supply of money and credit. Currently, one of the most important roles of the federal government is to regulate and also ensure that there is stability
in the economy. Through the use of both policies options, there is a goal of increasing and decreasing the level of business activity in the country.
Governments in the world prefer to have a productive growing economy, but an economy can also be too productive where the government may enact
policies to slow down the economic growth. This paper will discuss how both the monetary and fiscal policies are used in keeping the unemployment
and inflation low while ensuring that the GDP is increasing.
How fiscal and monetary policy can move the numbers to an acceptable level while keeping inflation the same The government attempts to keep
unemployment and inflation to a minimum; at the same time, it attempts to obtain fast financial development with lasting symmetry in the balance of
payments. These aims are attracted concentration since they are not likely to be obtained in their totality. Contrasted to an earlier performance,
inflation of USA has been low and extraordinarily even since the

Mankiw's Monetary Policy
The action of the Federal Government poses a great impact on the status of the economy, the livelihood of the people, and the way other nations will
react. The reality of recession differs from one environment to another, but the meaning of recession is the same. If policy makers and government
officials ignored the outcry from their nation over a recession, then the results would lead to a depression.
First, the term recession is identified by N. Gregory Mankiw as "a period of declining real incomes and rising unemployment." The actions of the
Federal Reserve play a major role in struggling against the negative effects of a recession. In doing that, the Fed may use various methods, the most
important of which are monetary policies. Monetary ... Show more content on Helpwriting.net ...
Furthermore, over the first two years of the crisis the policy expectations showed little change. The Fed intervention was not, however, limited to the
actions mentioned above. Therefore, special credit programs, aimed at the restoration of the financial sphere, were implemented. According to N.
Gregory Mankiw, "price movements are how markets equilibrate supply and demand." Moreover, banks had to undergo "stress tests" in order to prove
that they had sufficient capital. It is identified by Engen, Thomas, Laubach, and David that, "these initiatives are believed to have improved the
people's attitude towards banking system and broadened the flow of credit, which helped to foster economic

The Monetary System Of Nepal
1.1.3Monetary Perspective The monetary system of Nepal shows the dualistic nature of monetary economy. The urban is merged in organized
industries, trade and service sector. The rural economy, where the majority of people at subsistence level without any surplus of exchange, does not
show any improvement in the process of monetization.When we look historically in the monetary system of Nepalese economy, it seems the two
commercial banks viz. Nepal Bank Ltd. (1936) and the Rastriya Banijya Bank (1965) played an important role in the Nepalese money market. Though
those two banks were different in origin, they are now operating under the same rule and regulation of Commercial Bank Act 1974(Sharma, 1987:53).
The Nepal Rastra Bank as a central bank of country took entirely a decade since its establishment in 1956, to consolidate its power as banker's bank
and to regulate operations of banking. By the same token, the Nepal Industrial Development Corporation (NIDC) was set up in 1959 with the
objective of providing financial outgoing of new industries in country. The Agricultural Development Bank (ADB) was also established in 1968 with
a view of financing in agricultural sector. Gaudel (2000) has presented some propositions regarding monetary perspective of Nepalese economy which
are as follows:–
–The monetary structure of the Nepalese economy is dualistic in nature. It implies that the banking and financial intermediaries have no significant
influence on

The Fed And Monetary Policy
1. The Fed and Monetary Policy
Monetary policy is the action taken by the Federal Reserve to expand or contract the money supply and influence interest rates.
After checking the current news on monetary policy, describe the Fed's current policy – is it expanding or contracting the money supply, and why? Do
you think that this policy could increase or reduce inflation?
The Fed is expanding the money supply. The Fed have data that shows a positive increase in the labor market, house hold spending, housing sector. The
Fed is trying to increase price stability, strengthen the labor market, and expand economic activity within the nation. Their policy in place is to reduce
inflation.
2. Inflation – Winners and Losers
We often hear of inflation

The International Monetary Fund : An Evolving Role As A...
I.Introduction
For the past 15 years, China has been in the limelight as one of the world's fastest growing economy. The International Monetary Fund (2014)
reported China's average growth rate at an average of 10% over the past 30 years. The market economy of China is the world's second largest
economy by nominal GDP based on the World Bank Data. In spite of this fast growing economy, the country, like any developing country has
experienced rough inflationary dynamics, and to target this, a mix of Monetary Policies have been adopted. Reserve Ratio Requirement (RRR) has an
evolving role as a Monetary Policy tool to target these inflations. Ma, et al. (2011), presented that The People's Bank of China (PBC) has actively
changed its ... Show more content on Helpwriting.net ...
II. Inflation in the Recent Past
For the past decades, China has been in the limelight for inflationary episodes. Funke (2006) has compared this phenomenon as a "roller coaster ride".
But Girardin et.al. (2013) argues that there is a remarkable inflation performance over the past decade, in spite of the absence of explicit inflation
targeting. This section shall focus on the inflations of the recent past of China. To contextualise this section, how inflation became a normal trend of
China's economy, the third, fourth and fifth phase of the economic reform of China shall be presented according to the study of Funke (2006). During
the third (1988–1991) and fourth phase of economic reform (1992–1998), the reform process was characterized by lack of effective macroeconomic
policy intruments. The effect was a substantial increase in inflation after price liberalisation. The fifth phase of economic reform (1998 to present) can
be characterized by broad–based enterprise, financial and social reforms. Inspite the sound mix monetary policies of the People's Bank of China, the
fifth phase of economic reform apparently still have substantial inflation increase. Figure 1 shows inflation peaks for years 2004, 2007, 2008 and 2011
respectively.
Source: Author's computation based on World Bank Data
In 2004, China's annual rate of inflation hit a seven–year

Monetary Policy
Monetary policy has some basic goals: to promote "maximum" sustainable output and employment and to promote "stable"
prices. The term "monetary policy" refers to the actions undertaken by a central bank, such as the Federal Reserve, to influence the
availability and cost of money and credit to help promote national economic goals. The Federal Reserve Act of 1913 gave the Federal Reserve
responsibility for setting monetary policy.
The Fed can not control inflation or influence output and employment directly; instead, it affects them indirectly, mainly by raising or lowering a
short–term interest rate called the "federal funds" rate. The Federal Reserve has certain tools at its ... Show more content on Helpwriting.net
...
Using these tools, the Federal Reserve influences the demand for, and supply of, balances that depository institutions hold at Federal Reserve Banks
and in this way alters the federal funds rate. The federal funds rate is the interest rate at which depository institutions lend balances at the Federal
Reserve to other depository institutions overnight. The point of implementing policy through raising or lowering interest rates is to affect people's and
firms' demand for goods and services. Changes in the federal funds rate trigger a chain of events that affect other short–term interest rates, foreign
exchange rates, long–term interest rates, the amount of money and credit, and, ultimately, a range of economic variables. This shows how policy
actions affect real interest rates, which in turn affect demand and ultimately output, employment, and inflation.
Monetary policy can be quickly altered and can affect money supply and investments very fast thus making speed and flexibility one of its strength.
Members of the Feds board are appointed a 14 year term. This isolates them from lobbying so therefore no political pressure to contend with. The tight
monetary policy helped the economy succeed from 1980 thru to 1990 by bringing down the inflation rate.
Monetary policy is not all strengths there are weaknesses also associated

Monetary Policies And Monetary Policy
Monetary Policies (Introduction)
The objective of monetary policy is to reserve the worth of the money by keeping inflation low, stable and predictable that lets Canadians be more
confident about the spending and investment choices. It reassures long–term investment in Canada's economy as well as contributes to continuous job
creation and better the production. It helps improve living standard. Canada's monetary policy outline consists of two key components working together
and reinforcing each other: the inflation–control target and the flexible exchange rate. The inflation–control target directs the decisions of the Bank
regarding the proper setting of the policy interest rate that maintains a stable price environment throughout the medium term.
Influencing Short–Term Interest Rates As to reach the inflation target, the banks have to make changes in the policy rate by raising or lowering it. If
inflation is beyond target, the banks will have to increase the policy rate, this inspires institutions to increase interest rates on the loan and mortgages.
Discouraging borrowing and spending which enables upward pressure on price. If inflation is under the goal, banks will lower the policy rate which
would then encourage financial institutions to lower interest rates on the loans and mortgages. This information shows how much banks are concerned
about inflation going higher or lower in terms of the goal. The key policy interest rates are when banks expect to be used in

Monetary Policy Rules And Monetary Policies
I. Introduction
Monetary policy rules are a fundamental part of the central bank models and are often refined to maximize economic welfare, specific to that country.
Monetary policy rules are a methodical response of monetary policy events in the economy. Essentially, it can be thought of as a numeric equation,
which determines the appropriate level for the central bank's policy instrument to be a function of one or more economic variables that describe the
state of the economy. It is imperative that economies model the reaction of their monetary authorities to changes in their respective economic
conditions; this equation is essentially a "reaction function." A reaction function utilizes its instruments to stabilizeinflation and output ... Show more
The output gaps for both countries are related to their potential and real Gross Domestic Products (GDP) in their respective currencies. Likewise for
both countries, inflation is related to the Consumer Price Index (CPI).
Figure 1 depicts a picture of very similar output gaps between the two countries, however the United States falls at a quicker rate. Therefore, the slope
of the U.S. is higher. Canada's economy from the year 2000–2007 operates above its capacity to withstand the level of production due to excess
demand and begins to fall just after, similar to the United States whom have transitioned between positive and negative output gaps since the beginning
of the decade.
Figure 2 shows inflation rates above 1.5, however they take a drastic fall in 2008–2009, which will correspond to the recession both economies were
facing. Prices in both economies plummeted, the U.S. falling almost 4% from 2008. Although never really constant, the inflation rates prior to the
recession were rather normal in both countries, however the instability could be a combination of a reduction in the supply of money in the economy
and a lack of regulation of the monetary policy rule. Figure 1
Figure 2
III. United States: Federal Funds Rate vs. Taylor Rule Rate (2000–2014)
The Taylor Rule is a numerical formula that relates the Federal Reserve's or the Bank Of Canada's target for the federal funds rate to the current state
of the

Monetary policy of Kazakhstan
Paper Work
Economic Theory
Monetary Policy of Kazakhstan
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the
purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment. Monetary
theory provides insight into how to craft optimal monetary policy. It is referred to as either being expansionary or contractionary, where an
expansionary policy increases the total supply of money in the economy more rapidly than usual, and contractionary policy expands the money supply
more slowly than usual or even shrinks it. Expansionary policy is traditionally used to try to combat ... Show more content on Helpwriting.net ...
The primary goal of Kazakhstan National Bank is to ensure the stability of prices in Kazakhstan.
Tasks:
development and implementation of the state's monetary policy; support of payment system functioning; implementation of foreign exchange
regulation and foreign exchange control; assistance for maintenance of financial system's stability.
Functions:
realization of the state monetary policy in Kazakhstan; issuance of banknotes and coins on the territory of Kazakhstan; the function of a bank of banks;
the financial advisor and financial agent of the Kazakhstan Government; organization and supervision of functioning of payment system; realization of
currency control and currency regulation in Kazakhstan; management of the gold currency assets of the National Bank of Kazakhstan; control and
supervision over the activities of the financial organizations and regulation of their activities within the competence of the National Bank of
Kazakhstan; management of assets of the National fund of Kazakhstan.
Trends in Central Banking: The central bank influences interest rates by expanding or contracting the monetary base, which consists of currency in
circulation and banks' reserves on deposit at the central bank. The primary way that the central bank can affect the monetary base is by open market
operations or sales and purchases of second hand government debt,

Monetary Policy And Its Effects On The Economy
Introduction
Monetary policy has created financial stability and a lesser impact on the economy. In the aftermath of the financial crisis, many financial institutions
had little or no options just bear the burden of their immature practices. These financial institutions brought major fatalities into the markets increasing
the scope and vulnerability of the financial sectors. According to the Federal Reserve, monetary policy is an action of the central bank to achieve
macroeconomic policy objectives such as price stability, full employment, and stable economic growth.
Monetary policy has had a positive impact precisely the U.S economy. The unemployment rate has reduced and the economy has shown signs of
recovering. Moreover, many central bank governors have different views and practices when it comes to monetary easing, at such, to prevent further
crisis spill–out into the economy. In the short, the Federal Reserve chairs manage through decisions and tackle the crisis as prudent as possible. As we
have seen with quantitative easing, purchasing bonds, and making general influence of short–term market interest rate. An article by Market Watch,
lesson from the switch to Bernanke from Greenspan, when Ben Bernanke first went before senate for his nomination to become Federal Reserve
chairman in November 2005, the senators wanted to know just one thing: would you he continue to do everything that Alan Greenspan had done. To
our surprise, Ben Bernanke continued the Greenspan

Monetary Policy of Pakistan
MONETARY POLICY
[A REVIEW]
[2009]
BBA–Morning–2007
Saira Yoususf...Roll # 18
Mehwish Khalil...Roll # 14
Salman Ahmed...Roll # 09
Farhan Ahmed...Roll # 23
Nasir Hanif...Roll # 49
Zaid Munir...Roll # 46
Presented to:
PROF. HASSAN KAMRAN
Presented by:
Saira Yousaf...roll no. 18 Mehwish Khalil...roll no.14 Salman Ahmed...roll no. 09
Farhan Ahmed...roll no. 23
Nasir Hanif...roll no.49
Zaid Munir...roll no.46
ACKNOWLEDGEMENTS
The most important acknowledge is to our Lord Most Merciful Most Wise by Whose mercy we were able to begin this project, His Mercy is such that
unworthy slaves like ourselves are given the ability to work hard and to be grateful towards all He has given us.
Allah states in the Quran:

"Then remember Me; I ... Show more content on Helpwriting.net ...
1. The Act stipulates that the Central Board of Directors of the State Bank of Pakistan
(SBP) shall 'secure monetary stability and the soundness of the financial system'.
2. However, the Act currently has twin objectives: price stability and growth. It does not define 'monetary stability' with precision, although Sections9
(a) and (b) do set out monetary policy formulation and objectives. These ambiguities have allowed the government to adopt different monetary policy
frameworks at different times. To improve transparency, the IMF has recommended to the Pakistani authorities that the SBP Act be amended to define
the term more clearly and to establish a hierarchy of multiple objectives of monetary policy.
3. The SBP is currently working to amend the Act to reflect the bank's role in the foreign exchange market, as well as to clarify monetary policy.
When monetary policy is made?
In February 1994, the SBP was granted full autonomy to regulate and supervise monetary and credit mechanisms. Following 2006 a separate
independent body of monetary policy and research department was created.
The process of monetary policy formulation usually begins at the start of the fiscal year when SBP sets a target of M2 growth in line with
government's targets of inflation and growth (usually in the month of May) and an estimation of money demand in the economy.
The basic idea:
The objectives

What Is Monetary Policy?
What is Monetary Policy? Monetary policy is a wing of the economic policy that shows availability of money in the economy. Monetary policy can be
defined in terms of quantity of money or in form of interest rates. This brings us to the question of what is money? Money represents purchasing power
with which an individual can buy any commodity. This implies that there is continuous demand and supply of money in an economy. As learnt in class,
national income and interest rates are the two major determinants of aggregate demand for money. On the other hand there are two aspects of money
supply. They are broad money, which includes currency and all deposits and narrow money, which includes currency and demand deposits.
Keynesian macroeconomics was majorly responsible for introducing the idea of creating demand in an economy using monetary and fiscal policy
through government intervention. On the other hand economist Milton Friedman believed in market forces more than government intervention. He
thought that monetary policy couldn't control real variables like unemployment and GDP in the long run. In the recent times central banks play a very
important role in controlling the monetary policy. From what I understand there are two types of central banks: (1) Banks like European Central bank
(ECB), which focus primarily on price stability and (2) Banks like Reserve Bank of India (RBI), which focus on price stability, employment and
output. I have divided this paper into various

Monetary Policy Rules And Monetary Policies
Monetary policy rules are a fundamental part of the central bank models and are often refined to maximize economic welfare, specific to that country.
Monetary policy rules are a methodical response of monetary policy events in the economy. Essentially, it can be thought of as a numeric equation,
which determines the appropriate level for the central bank's policy instrument to be a function of one or more economic variables that describe the
state of the economy. It is imperative that economies model the reaction of their monetary authorities to changes in their respective economic
conditions; this equation is essentially a "reaction function." A reaction function utilizes its instruments to stabilizeinflation and output fluctuations in
response to demand or supply shocks. In a macroeconomic environment, the policy rules a Central bank develops is essential and thus numerous
monetary policy rules have been discussed throughout economic literature.
Monetary policy rules in Canada differ from the United States, as the Canadian monetary policy has an inflation–control target and the flexible
exchange rate. On the other hand, the US rate is the interest rate that a bank charges another for borrowing money overnight. The rates determined
through the monetary policy rules determine many factors of the economy and globally as well.
II. Canada vs. United Sates: Output Gap & Inflation Comparisons (2000–2014)
The data for these graphs were retrieved through the International

Monetary Policy Paper
{draw:rect} {draw:g} {draw:frame} Monetary Policy Paper Objective I choose to research and write on the topic of monetary policy. My two main
sources of information were www.federalreserve.gov and www.frsbf.org. From my research I would define monetary policy as the macroeconomic act
of keeping the country financially stable. According to www.frsbf.org "The object ofmonetary policy is to influence the performance of the economy as
reflected in such factors as inflation, economic output, and employment. It works by affecting demand across the economy–that is, people's and firms'
willingness to spend on goods and services". The information that I located suggested that the main issues that monetary policy deals with are inflation
... Show more content on Helpwriting.net ...
Others say that the apex bank would maintain status quo on both the short–term rates as well as cash reserve ratio (CRR) and adopt a wait and watch
stance. However, with the US Federal Reserve slashing its rates by 0.75% last week, some bankers feel that the RBI might consider a 0.25–0.50% cut
in interest rates and a 0.25% reduction in the CRR margin.Following the Fed rate cut, the possibility of huge capital inflows into India has increased
and the RBI might take steps to narrow the interest rate differential between the two countries, Indian Banks' Association's chief executive H N Sinor
said. "The RBI may send out a signal by reducing either the reverse repo or the repo rate by 0.25–0.50% to moderate capital flows," Sinor said. The
repo and reverse repo rates currently stand at 7.75 % and 6% respectively. While a hike in key rates might temper capital inflows, a cut in CRR would
release some capital, which could be used by banks for increasing credit offtake and thereby spurring growth, which has slowed down in some sectors
including manufacturing, textiles and consumer durables. "High interest rates have hit growth in certain sectors. Whether the RBI does it this
month–end or a little later remains to be seen," private sector Yes Bank chief Rana Kapoor said. Dena Bank chairman P L Gairola feels that one could
expect a

Monetary Quiz
14–1. The use of money and credit controls to achieve macroeconomic goals is:Fiscal policy.в†’Monetary policy.Supply–side policy.Eclectic policy.|
14–2. Which of the following is responsible for buying and selling of government securities to influence reserves in the banking system?Twelve
Federal Reserve banksThe Executive Branch of governmentв†’The Federal Open Market CommitteeThe Board of Governors of the Federal Reserve|
14–3. Which of the following represents the money multiplier?Required reserve ratio Г— total depositsTotal reserves – required reserves(Total reserves
– required reserves) Г— multiplierв†’1 Г· (required reserve ratio)| 14–4. Suppose the banks in the Federal Reserve System have $200 billion in ... Show
more content on Helpwriting.net ...
| 14–7. When a bank is deficient in reserves, it can go to the federal funds market to borrow what it needs from another bank.| 14–10. The open market
operations are conducted daily and do not have as large undesirable effects as altering the reserve requirement; as such, they are the Fed's favored tool.|
14–9. When a bank borrows money from the Fed, the bank's balance sheet has an equal increase in liabilities which includes loans from the Fed and
assets which includes the additional reserves.| 14–11. When the Fed wishes to increase the reserves of the member banks, it:в†’Buys securities.Raises
the reserve requirement.Raises the discount rate.Sells securities.| 14–12. Tony buys a bond in the amount of $500 with a promised interest rate of 15
percent. If the market interest rate decreases to 5 percent, Tony can sell his bond for up to:$500.$250.в†’$1,500.$1,250.| 14–13. The Fed can decrease
the federal funds rate by:Selling bonds.в†’Buying bonds which causes market interest rates to fall.Simply announcing a lower rate since the Fed has
direct control of this interest rate.Changing the money multiplier.| 14–14. If the Fed wishes to increase the money supply it could:в†’Lower the discount
rate.Raise the minimum reserve ratio.Sell securities on the open market.Issue more bonds.| 14–15. In order to increase the money supply the Fed
can:Raise

Fiscal and Monetary Policies
Fiscal and Monetary Policies
Charles T. Sheridan
Student ID: 4290575
ECON 102
American Military University
Dr. John Theodore
Economies everywhere in the world have fluctuations, there Gross Domestic Product (GDP) is either growing (economic boom) or it is not producing
enough and falls into a recession. In a recession, an economy's GDP suffers two consecutive quarters of negative growth. Personal consumption,
government spending and the amount a country imports and exports measure GDP (Amadeo, nd) while Rittenberg and Tregarthen state that personal
consumption (C), gross private domestic investment (I), government purchases (G) and net exports (Xn) make up GDP (2009). The most recent
recession in the U. S. economy was in ... Show more content on Helpwriting.net ...
However, government purchases will lead to a greater impact on the aggregate demand curve than a change in income taxes or transfers (Rittenberg
and Tregarthen, 2009), The basic objectives of monetary policy is to "help promote national economic goals of economic growth, full employment, and
price stability by influencing interest rates, the supply of money and credit" (Rittenberg and Tregarthen, 2009). Monetary policy has a cause–effect
chain that can help expand money supplies by lowering interest rates to motivate consumers to borrow money (Rittenberg & Tregarthen, 2009).
The extra money in the economy increases jobs. To help with monetary policy, the US government created the Federal Reserve (or the Fed). The Fed
can raise or lower interest rates to help stimulate employment and help stabilize price (Rittenberg & Tregarthen, 2009). The Fed has three policy
tools; setting the reserve requirement for banks (usually 10%), operating the discount window (where private banks can borrow money from the
government to increase their reserves or reduce their liabilities), and conduct open–market operations (where the Feds buy bonds to create new
reserves) (Rittenberg & Tregarthen, 2009). According to Rittenberg and Tregarthen, these purchases of bonds could possibly increase the money
supply (2009). When private banks have extra reserves, they earn

Monetary Policy in the United States
Abstract
The role of government in the American economy goes past just being a regulator for specific industries. There are two main tools for achieving these
objectives: fiscal policy and monetary policy. The Federal Reserve sets the nation's monetary policy to promote the objectives of maximum
employment, stable prices, and moderate long–term interest rates.
Monetary Policy in the United States
Monetary policy is the government or central bank process of managing money supply to achieve specific goals (wikipedia.org). The United States
monetary policy affects all kinds of economic and financial decisions people make in this country. Whether to buy a car, or build a house,... Show more
Monetary policy objective is to influence the performance of the economy, in inflation, exchange rate with other currencies and unemployment.
Monetary authority has the ability to alter the interest rate and the money supply, with affecting the demand of the economy. TheFederal Reserve
System influences demand mainly by altering the (raising and lowering) short–term interest rates, to achieve policy goals. These goals are listed in the
1977 amendment to the Federal Reserve Act. With inflation increasingly devastating the economy, the central bank abruptly tightened monetary policy
beginning in 1979. This policy successfully slowed the growth of the money supply, but it helped trigger sharp recessions in 1980 and 1981–1982. The
inflation rate did come down, however, and by the middle of the decade the Federal Reserve was again able to pursue a cautiously expansionary
policy. Interest rates, however, stayed relatively high, as the federal government had to borrow heavily to finance its budget deficit. Rates slowly came
down, too, as the deficit narrowed and ultimately disappeared in the 1990s. The growing importance of monetary policy and the diminishing role
played by fiscal policy in economic stabilization efforts may reflect both political and economic realities. Fighting inflation requires government to take
unpopular actions

Growth Of Monetary And India
GROWTH OF MONETARY AGGREGATES IN INDIA IN POST REFORM
–PERIOD (1990–91 to 2014–15)
Nandini Sud
ABSTRACT
Money supply plays a pivotal role in an economy in terms of affecting its prices, output, exchange rate, etc. In a developing economy like India where
development efforts are majorly made through government expenditure, money supply in the economy tends to increase rapidly, which may cause over
expansion of money supply. Thus, there arises a need for comprehensive study of monetary aggregates and their components to regulate money supply
which provides a base for conducting monetary policy in the economy. The present study is an attempt to analyze the growth in various monetary
aggregates and their components for India in the post–reform period of 1990–91 to 2014–15.
INTRODUCTION Money supply is one of the most important macroeconomic variable in an economy and plays a pivotal role in its economic growth
and development. Along with being an important determinant of price stability, money supply also asserts substantial influence on the economy's
output, employment, exchange rate, foreign trade, etc. In a developing economy like India, most of the development activities are undertaken by
incurring government expenditure (such as enhancing infrastructure, providing quality education and healthcare, programs for agriculture and
MSME's, etc.) which causes a rapid increase in money supply and may also lead to its over expansion. However, if the dual objective of economic

Rbi Monetary Policy
Introduction The central bank of the country is the Reserve Bank of India (RBI). It was established in April 1935 with a share capital of Rs. 5
crores on the basis of the recommendations of the Hilton Young Commission. The share capital was divided into shares of Rs. 100 each fully paid
which was entirely owned by private shareholders in the begining. The Government held shares of nominal value of Rs. 2,20,000. Reserve Bank of
India was nationalised in the year 1949. The general superintendence and direction of the Bank is entrusted to Central Board of Directors of 20
members, the Governor and four Deputy Governors, one Government official from the Ministry of Finance, ten nominated Directors by the
Government to give representation to... Show more content on Helpwriting.net ...
The Reserve Bank Of India' Bulletin is a monthly publication. It not only provides information, but also results of important studies and investigations
conducted by reserve bank are given. 'The Report on currency and finance' is an annual publication. It provides review of various developments of
economic and financial importance. 2. Regulatory And Supervisory Functions:– The RBI has wide powers of supervision and control over commercial
and co–operative banks, relating to licensing, establishment, branch expansion, liquidity of Assets, management and methods of working,
amalgamation, re–construction and liquidation. The supervisory functions of RBI have helped a great in improving the standard of banking in India to
develop on sound lines and to improve the methods of their operation. 4. Clearing House Functions:– The RBI acts as a clearing house for all member
banks. This avoids unnecessary transfer of funds between the various banks. 3. Development And Promotional Functions :– The RBI has helped in
setting up Industrial Finance Corporations of India (IFCI), State Financial Corporations (SFCs), Deposit Insurance Corporation, Agricultural Refinance
and Development Corporation (ARDC), units Trust of India (UTI) etc. these institutions were set up to mobilize savings, promote saving habits and to
provide industrial and agricultural finance. RBI has a special Agricultural Credit Department (ACD) which studies the

It is the role of the federal government therefore to keep inflation low as well as keeping unemployment rate down. Philips curve gives the probability
of having both a low unemployment and inflation hence providing the stakeholders in the sector in the short run a tradeoff between unemployment and
inflation (Mark & Asmaa, 2012). Unemployment can be kept under control by the government while at the same time allowing inflation OR to keep
controlling prices and not controlling unemployment. This compromise between the two is shown as a contra–relation between inflation and
unemployment. In the long run, the government can only afford to play around with inflation while having zero control over unemployment. At this
natural rate of unemployment the curve will be vertical.
According to what we are given, the rate of inflation is at an acceptable level of 2 % while unemployment rate is exceptionally high. The only way to
counter this is by reducing the tax rates and increasing the government expenditure on both services and goods which is an expansionary policy. The
reason for this policy is to first raise the budget deficit. For consumption and spending not to drop the fed can choose to increase the money supply to
keep it high.
The common tools for expansionary monetary policy are the open market purchase of securities and lowering of the FED landing rate. Because of
increased availability of money the aggregate supply will not keep up with rise in demand hence leading to

What Is Monetary Policy? Explain the General Objectives of...
What is Monetary policy? Explain the general objectives of monetary policy.
103 days ago by Galaxy Edu Planet 0
Q. What is Monetary policy? Explain the general objectives of monetary policy. Answer: Monetary Policy
Monetary policy is a part overall economic policy of a country. It is employed by the government as an effective tool to promote economic stability and
achieve certain predetermined objectives.
Meaning and Definition:
Monetary Policy deals with the total money supply and its management in an economy. It is essentially a programme of action undertaken by the
monetary authorities generally the central bank to control and regulate the supply of money with the public and the flow of credit with a view to
achieving economic ... Show more content on Helpwriting.net ...
On account of all these benefits, monetary authorities have to take concrete steps to check price oscillations. Price stability is considered as one of
the prerequisite condition for economic development and it contributes positively to the attainment of a steady rate of growth in an economy. This is
because price stability will build up public morale and instill confidence in the minds of people, boost up business activity, expand various kinds of
economic activities and ensure distributive justice in the country. Prof Basu rightly observes, "A monetary policy which can maintain a reasonable
degree of price stability and keep employment reasonably full, sets the stage of economic development".
3. Exchange rate stability:
Maintenance of stable or fixed exchange rate was one of the major objects of monetary policy for a long time under the gold standard. The stability of
national output and internal price level was considered secondary and subservient to the former. It was through free and automatic imports and exports
of gold that the country was able to remove the disequilibrium in the balance of payments and ensure stability of exchange rates with other countries.
The government followed the policy of expanding currency and credit with the inflow of gold and contracting currency and credit with the outflow of

Framework Of Monetary Policy
The Fed retains a number of monetary policy tools that can be placed against crisis. The first set of tools was Provision of short–term liquidity to
sound financial institutions and these activities incorporate making new offices for selling credit and making essential securities dealers, and
additionally banks, qualified to obtain at the Fed's markdown window (Federal Reserve, 2009).
The second set of tools which involve the provision of liquidity directly to borrowers and investors in key credit markets. In this the government has
introduced advantages to buy profoundly evaluated business paper at a term of three months and to give reinforcement liquidity for money market
mutual funds (Federal Reserve, 2009).Also, the Federal Reserve and ... Show more content on Helpwriting.net ...
In addition, the usage of Federal Reserve credit is resolved in substantial part by borrower needs and will tend to increment when economic situations
intensify and decrease when economic situations progress. Setting an objective for the size of the Federal Reserve's balance report, as in a QE
administration, could in this manner have the unreasonable impact of compelling the Fed to fix the terms and accessibility of its loaning now and
again when economic situations were intensifying, and vice verse (Financial times, 2011).
The European Central Board(ECB) has acted very quickly and in sufficient manner since the start of Financial market disturbance. The ECB minimized
the key policy rate by 325 basic points, interest rate on fundamental renegotiating operations now remains at 1.0%, its most reduced level since the
launch of euro. ECB substantive monetary policy facilitating is as of now being felt in the genuine economy. Furthermore, bringing down the policy
interest rate quickly and sharply, ECB have turned to exceptionally non–standard

Notes On Monetary And Monetary Policy Essay
FROM MONETARY TARGETING TO INFLATION TARGETING BY DAVID EYO USANG 138581
List of Abbreviations
CB Central Bank
ECB European central bank
FEDS The federal reserves
MP Monetary Policy
IT Inflation Targeting
MT Monetary Targeting
M1 Narrow money
M2 Intermediate money
M3 Monetary aggregates 3
MB Monetary Base
MS Money Supply
INTRODUCTION
For decades, high inflation has always been a potential threat to the macroeconomic stability and long–term economic growth in the world. Central
banks have been modelling strategies to tackle the general price instability in an economy. Different models have been adopted to predict general price
levels, maintain a favorable inflation rate and promote economic growth. This can be achieved by ensuring that the economic variables are properly
regulated by committed and reliable financial institutions in a state. Getting the model and monetary policy right is crucial for the health of an economy.
Overly expansionary MP leads to high inflation, which

Expansionary Monetary Policy
The federal reserve should adopt expansionary monetary policy to stimulate the economy to promote growth and development. Currently our nation is
in a position where there is no compelling reason to raise interest rates to combat inflation, therefor for the short term I believe we need to push for
continuing to decrease unemployment and aim for wage growth. The economic outlook is unclear as foreign economic developments, in particular,
pose risks to the United State's economy. Expansionary monetary policy promotes a positive impact in a few different areas like local investment and
global economy. Monetary expansion entails increasing the amount of money that is in our economy. This can be done by the Federal Reserve
purchasing United States treasury bonds, reducing the federal funds rate, and by ... Show more content on Helpwriting.net ...
It is evident that we take action now to aid our economic activity. We can do this by adopting an expansionary monetary policy to stimulate our
economy. The Federal Reserve has historically held rates at a relatively low level, but it is important that we gradually increase rates as our economy
strengthens. Just last week our nation saw that, "the Federal Reserve sent a sharp, simple message to financial markets (on Wednesday): Pay attention.
The Fed is thinking seriously about raising its benchmark interest rate at its next meeting, in June." Our economy is not quite ready to tighten
monetary policy. Expansion is relatively easy for the Fed to implement, and can be put in to action quickly. The Fed is already holding rates at very
low level, but it is tough to predict what other global economies will do in the near future to stimulate their own respective economies. As a nation, I
believe that in this moment in time, we need to continue the expansionary trend until we are stable enough to make great moves towards an ideal state
for an economic

International Monetary System
INTERNATIONAL MONETARY SYSTEM & MULTULATERAL DEVELOPMENT BANKS Meaning International Monetary System refers to the
system prevailing in world foreign exchange markets through which international trade & capital movements are financed & exchanges rates are
determined. MNCs operate in a global market, buying/selling/producing in many different countries. For example, GM sells cars in 150 countries,
produces cars in 50 countries, so it has to deal with hundreds of currencies. What are the mechanics of how currency and capital flows internationally?
International Monetary System – Institutional framework within which: 1. International payments are made 2. Movements of capital are
accommodated 3. Ex–rates are determined An international... Show more content on Helpwriting.net ...
The USA used the Eagle as their unit, and Germany introduced the new gold mark, while Canada adopted a dual system based on both the
American Gold Eagle and the British Gold Sovereign. Australia and New Zealand adopted the British gold standard, as did the British West
Indies, while Newfoundland was the only British Empire territory to introduce its own gold coin as a standard. Royal Mint branches were
established in Sydney, New South Wales, Melbourne, Victoria, and Perth, Western Australia for the purposes of minting gold sovereigns from
Australia's rich gold deposits. The Gold Exchange Standard Towards the end of the 19th century some of the remaining silver standard countries
began to peg their silver coin units to the gold standards of the United Kingdom or the USA. In 1898,British India pegged the silver rupee to the
pound sterling at a fixed rate of 1s 4d, while in 1906, the Straits Settlements adopted a gold exchange standard against the pound sterling with the
silver Straits dollar being fixed at 2s 4d. Meanwhile at the turn of the century, the Philippines pegged the silver Peso/dollar to the US dollar at 50
cents. A similar pegging at 50 cents occurred at around the same time with the silver Peso of Mexico and the silver Yen of Japan. When Siam
adopted a gold exchange standard in 1908, this left only China and Hong Kong on the silver standard. The gold specie standard ended in the United
Kingdom and the rest of the British Empire at the outbreak of

Monetary Policy

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