Monetary Policy simple PowerPoint presentation.

2. What is Monetary Policy?
Monetary policy is a process of controlling the
supply of money in the economy.

3. CIRCULATION OF MONEY

4. Why to control Supply of Money?

5. How to control Supply of Money?
• Bank Rate Policy
• Open Market Operations
• Changes in Reserve Ratios

6. Bank Rate Policy
High Bank Rate = Less Supply of Money
Low Bank Rate = More Supply of Money
(During Inflation)
(During Deflation)

7. Open Market Operations

8. Changes in Reserve Ratios

9. Merits of Monetary Policy
• Controlls Inflation & Deflation
• Employment
• Improves Economic Conditions

10. Demerits of Monetary Policy
• No immediate results
• Rise in interest rate to reduce inflation may
lead to unemployment

11. Conclusion
Central banks work hard to ensure that a
nation's economy remains healthy. One way
central banks do this is by controlling the
amount of money circulating in the economy.
They can do this by influencing interest rates,
setting reserve requirements, and employing
open market operation tactics, among other
approaches. Having the right quantity of money
in circulation is crucial to ensuring a healthy and
sustainable economy.