Monetary Policies And Monetary Policy Essay - 1309 Words

Monetary policies Monetary policies are strategies used by the central bank, financial regulatory committee of currency board to regulate the amount of money supply in the economy. There are two types of monetary policies. These are expansionary monetary policies and contractionary monetary policies. Expansionary monetary policies entails increasing money supply in the economy. Expansionary monetary policies affect macroeconomic variables differently. It leads to reduction of unemployment, increases consumer expenditure, leads to economic growth and development and increase private sector borrowing. Increase in private sector borrowing increases the capacity to invest and create more employment opportunities. Contractionary monetary policies on the other hand aims at reducing the amount of money in supply in the economy. Contractionary monetary policy slows economic growth and development, unemployment increase, it reduces inflation and it can discourage investors from borrowing. Contraction monetary policies are used in most instances to curb growth of inflation rate. This is achieved by raising the interest rates. However, contraction monetary policies can lead to recession in the economy. Analysis and results Aggregate demand and aggregate supply model Aggregate demand and aggregate supply forms an economic model which incorporates the macroeconomic variables and explains the behavior of the economy. Aggregate demand and aggregate supply determines theShow MoreRelatedMonetary Policies And Monetary Policy750 Words   |  3 PagesMonetary 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. 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IfRead MoreMonetary Policy And Fiscal Policy850 Words   |  4 PagesThe Federal Government uses the monetary policy and fiscal policy to establish and determine the best way to manage the economy. Monetary policy is used by the Federal Reserve to manage the money supply. This includes credit, cash, check, and money market mutual funds, with loans, bonds, and mortgages being the mo st important. This policy can be broken into two categories: monetary restraint and monetary expansion. As it states, one is trying to restrain the market while the other expresses expandingRead MoreFiscal Policy And Monetary Policy1735 Words   |  7 Pagesis fiscal and monetary policy to find out a way to find the economic. It is macroeconomic policy that pursues to enlarge the money supply to boost economic growth or combat inflation. One of the form is fiscal policy of expansionary policy, which comes in the method of tax cuts, discounts and increased government spending. Expansionary policies do come from central banks, which focus on cumulative the money supply in the economy. Now let look at the break down of expansionary policy which deal withRead MoreMonetary Policy And Fiscal Policy1178 Words   |  5 Pagescrisis. Monetary policy and fiscal policy are two tools by which government uses to guide the economy. Sometimes the economy is challenged with both inflation and un employment at high rates. Macroeconomics breaks down the entire economy and the issues affecting it, including inflation, unemployment, economic growth, and monetary and fiscal policy. A country has to come up with good macroeconomic policies in order to better their economy. This paper will discuss the government s policies adopt toRead MoreFiscal Policy And Monetary Policy2086 Words   |  9 Pages 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. 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