Cbk - monetary policy, Finance Basics

CBK - Monetary Policy

The money supply in the economy has a main effect on both the rate of inflation and the level of economic activity. The level of money supply is controlled with the CBK.

The initial effect of that an action is to reason interest rates to decline however this may also lead to increase in expected rate of inflation that in turn pushes the interest rates up in the long run. If the CBK wants to stimulate the economy, it increases the money supply. The reverse of this would occur if the CBK tightens the money supply in the economy.

Note

In periods whenever CBK is directly interfering along with the market, the yield curve will be distorted. S.T interests will be also low if the banks are easing the credit and they could be too high if the banks are tightening their credit.

Posted Date: 1/30/2013 3:04:23 AM | Location : United States







Related Discussions:- Cbk - monetary policy, Assignment Help, Ask Question on Cbk - monetary policy, Get Answer, Expert's Help, Cbk - monetary policy Discussions

Write discussion on Cbk - monetary policy
Your posts are moderated
Related Questions
Agency Theory The agency problem between managers and shareholders can be resolved via paying high dividends. If retention is low, managers are necessary to increase additiona

Based on the example in Lesson 2, compute your quarterly interest for three years if you deposit $500 at 8 percent, compounded quarterly. Remember to divide the 8 percent by 4 to g

A bond that has $1000 face value and a contract interest rate of 11.4%. The bonds have a current value of $1124 and will mature in 10 years. The firms marginal tax rate is 34%. The

Basic EOQ Model The basic inventory decision model is Economic Order Quantity or called EOQ model. This model is specified via the following equation as: Whereas:Q is

Solve the following Linear Programming Problem using Simple method. Maximize Z= 3x1 + 2X2 Subject to the constraints: X1+ X2 = 4 X1 - X2 = 2 X1, X2 = 0

DIY Inc. plans to raise $200,000 with a right offering. The current stock price is $100 and there are 80,000 shares outstanding.  a. If DIY sets the subscription price to be $80

Turnover Ratios Turnover Ratios/efficiency/asset management ratio Turnover ratio shows the efficiency along with that the firm utilized the asset or resources at its dispos

What are the Features of Stock Exchange The key features of stock exchange are as below: (1) Organised Market: Stock Exchange is an organized market. Each stock exchang

Term Structure of Interest Rates The term structure of interest rate give details the relationship between the term to maturity and interest rates and the differences between

Definition of 'Capital Budgeting': The process in which a business calculates whether projects such as building a new plant or investing in a long-term risk are worth pursuing