How to control monetary policy, Macroeconomics

Assignment Help:

Q. How to control Monetary policy?

Remember that the money supply is equal to the money multiplier times the monetary base. We will presume that money multiplier is constant and because the monetary base is completely under the control of the central bank, central bank will control the money supply. 

Monetary policy = change in money supply 

Central bank actually has other monetary policy instrument apart from being able to conclude the money supply. The most significant one is the target interest rate for the overnight market. We won't consider the possibility of changing the target interest rate. Though we know that there is a negative relationship between target rate and money supply. Hence if you want to investigate the effect of an increase in target interest rate, you may just as well investigate a decrease in the money supply.


Related Discussions:- How to control monetary policy

Financial development in economy, Financial Development A well develope...

Financial Development A well developed financial system is very essential for the smooth functioning of any economy. One set of important statistical indicators that is used to

Gpd., the whole explanation of dpd

the whole explanation of dpd

Adam smith living in today''s economic climate, Imagine Adam Smith living i...

Imagine Adam Smith living in today's economic climate. Describe what current economic issues about which he might be most concerned with and state why?

Decrease the nominal deficit, Which of the following will decrease the nomi...

Which of the following will decrease the nominal deficit? A. An increase in taxes. B. An increase in the debt. C. An increase in government expenditures. D. An increase in interest

Marginal cost of seating a theatergoer, 1. if the marginal cost of seating ...

1. if the marginal cost of seating a theatergoer is $5 an the elasticity of demand is -3, the profit maximizing price is? 2. A firm determined that its total cost of production

National income, # ???? .. difference between gdp at market price and nnp...

# ???? .. difference between gdp at market price and nnp at factor cost

Illustrate the yield to maturity each bond, Consider following 5,000 value ...

Consider following 5,000 value securities. Bond Coupon Rate Selling price coupon payment yield to maturity% 6% $5000 6% $5500 10% $5000 12% $4500 A. Are those securities abov

Individual stocks return is normally distributed, Suppose that an individua...

Suppose that an individual stock's return is normally distributed with a mean of 9% and a standard deviation of 4%. What is the probability that the stock's return will be less tha

What are forms of price ceiling to lead inefficiency, What are forms of pri...

What are forms of price ceiling to lead inefficiency? Price ceilings frequently lead to inefficiency into the forms of: a. Ineffective allocation to consumers b. Wasted r

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd