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What are some of the difficulties of carrying out monetary policy?
Wiki User
∙ 11y ago
- One problem is the difficulty in gathering and evaluating information about M1 and M2.
- Keeping track of the growth of M1 and M2 becomes more difficult as money is shifted from savings accounts into intrest-paying checkable accounts or from checkable accounts into money market deposits accounts.
Wiki User
∙ 11y ago
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Some economists believe fiscal policy and monetary policy do not work very well.?
True
What is the Monetary Policy?
Monetary policy is economic policies usually guided by the central bank of a nation. The goals of monetary policy is often to promote economic growth while hold a low and steady inflation. The means of monetary policy is to adjust money supply or interest rate and in some cases regulation to cool off or boost the economy.
What are some issues that the Fed encounter when developing monetary policy?
because you or roung.
Features of current monetary policy in India?
The current monetary policy in India is under the authority of the Reserve Bank of India (RBI). Some of the features of the monetary policy are price stability, controlled expansion of bank credit, promotion of fixed investment, to promote efficiency and equitable distribution of credit.
What has the author Francis Scotland written?
Francis Scotland has written: 'Investment, a survey of models with some implications for the effects of monetary policy' -- subject(s): Mathematical models, Monetary policy, Investments
What are various instruments of monetary policy used by RBI?
Some instruments of monetary policy used by the Reserve Bank of India are price stability, restriction of inventories, promotion of efficiency and reducing rigidity. By using this policy, the RBI is able to control the money supply of its country's economy.
What has the author Michael J Moore written?
Michael J. Moore has written: 'Some new tests of efficiency in the forward exchange market' 'Financial innovation and the neutrality of money' -- subject(s): Mathematical models, Monetary policy, Money 'Less of a puzzle: a new look at the Forward Forex Market' 'Monetary policy in stage two of EMU' -- subject(s): Monetary policy
What are the disadvantages of monetary policy?
Some of the disadvantages of monetary policy include conflicts that may arise when wwwtrying to make amends to an already existing problem. Often, fixing one problem gives rise to new problems such as inflation or poor saving.
What is a main goal of the Federal Reserve in its monetary policy?
Meaning of Monetary PolicyThe term monetary policy is also known as the 'credit policy' or called 'RBI's money management policy' in India. How much should be the supply of money in the economy? How much should be the ratio of interest? How much should be the viability of money? etc. Such questions are considered in the monetary policy. From the name itself it is understood that it is related to the demand and the supply of money. Definition of Monetary PolicyMany economists have given various definitions of monetary policy. Some prominent definitions are as follows.According to Prof. Harry Johnson,"A policy employing the central banks control of the supply of money as an instrument for achieving the objectives of general economic policy is a monetary policy."According to A.G. Hart,"A policy which influences the public stock of money substitute of public demand for such assets of both that is policy which influences public liquidity position is known as a monetary policy."From both these definitions, it is clear that a monetary policy is related to the availability and cost of money supply in the economy in order to attain certain broad objectives. The Central Bank of a nation keeps control on the supply of money to attain the objectives of its monetary policy.Objectives of Monetary PolicyThe objectives of a monetary policy in India are similar to the objectives of its five year plans. In a nutshell planning in India aims at growth, stability and social justice. After the Keynesian revolution in economics, many people accepted significance of monetary policy in attaining following objectives.1. Rapid Economic Growth2. Price Stability3. Exchange Rate Stability4. Balance of Payments (BOP) Equilibrium5. Full Employment6. Neutrality of Money7. Equal Income DistributionThese are the general objectives which every central bank of a nation tries to attain by employing certain tools (Instruments) of a monetary policy. In India, the RBI has always aimed at the controlled expansion of bank credit and money supply, with special attention to the seasonal needs of a credit.Let us now see objectives of monetary policy in detail :-1. Rapid Economic Growth : It is the most important objective of a monetary policy. The monetary policy can influence economic growth by controlling real interest rate and its resultant impact on the investment. If the RBI opts for a cheap or easy credit policy by reducing interest rates, the investment level in the economy can be encouraged. This increased investment can speed up economic growth. Faster economic growth is possible if the monetary policy succeeds in maintaining income and price stability.2. Price Stability : All the economics suffer from inflation and deflation. It can also be called as Price Instability. Both inflation are harmful to the economy. Thus, the monetary policy having an objective of price stability tries to keep the value of money stable. It helps in reducing the income and wealth inequalities. When the economy suffers from recession the monetary policy should be an 'easy money policy' but when there is inflationary situation there should be a 'dear money policy'.3. Exchange Rate Stability : Exchange rate is the price of a home currency expressed in terms of any foreign currency. If this exchange rate is very volatile leading to frequent ups and downs in the exchange rate, the international community might lose confidence in our economy. The monetary policy aims at maintaining the relative stability in the exchange rate. The RBI by altering the foreign exchange reserves tries to influence the demand for foreign exchange and tries to maintain the exchange rate stability.4. Balance of Payments (BOP) Equilibrium : Many developing countries like India suffers from the Disequilibrium in the BOP. The Reserve Bank of India through its monetary policy tries to maintain equilibrium in the balance of payments. The BOP has two aspects i.e. the 'BOP Surplus' and the 'BOP Deficit'. The former reflects an excess money supply in the domestic economy, while the later stands for stringency of money. If the monetary policy succeeds in maintaining monetary equilibrium, then the BOP equilibrium can be achieved.5. Full Employment : The concept of full employment was much discussed after Keynes's publication of the "General Theory" in 1936. It refers to absence of involuntary unemployment. In simple words 'Full Employment' stands for a situation in which everybody who wants jobs get jobs. However it does not mean that there is a Zero unemployment. In that senses the full employment is never full. Monetary policy can be used for achieving full employment. If the monetary policy is expansionary then credit supply can be encouraged. It could help in creating more jobs in different sector of the economy.6. Neutrality of Money : Economist such as Wicksted, Robertson have always considered money as a passive factor. According to them, money should play only a role of medium of exchange and not more than that. Therefore, the monetary policy should regulate the supply of money. The change in money supply creates monetary disequilibrium. Thus monetary policy has to regulate the supply of money and neutralize the effect of money expansion. However this objective of a monetary policy is always criticized on the ground that if money supply is kept constant then it would be difficult to attain price stability.7. Equal Income Distribution : Many economists used to justify the role of the fiscal policy is maintaining economic equality. However in resent years economists have given the opinion that the monetary policy can help and play a supplementary role in attainting an economic equality. monetary policy can make special provisions for the neglect supply such as agriculture, small-scale industries, village industries, etc. and provide them with cheaper credit for longer term. This can prove fruitful for these sectors to come up. Thus in recent period, monetary policy can help in reducing economic inequalities among different sections of society.Articles on Monetary Policy1. Instruments of Monetary Policy.2. Limitations of Monetary Policy.3. Recent Reforms in Monetary Policy.4. Evaluation of Monetary Policy.
What is the interaction between fiscal and monetary policy?
Fiscal policy chooses government expenditure and taxes. Monetary policy chooses interest rates to reach a set inflation target and minimise the output gap. The interaction in where fiscal authorities chooses a level of government expenditure that is not consistent with its steady state. This effects the output gap/inflation and thus interest rates, hence the interaction.
Is the cold war a current foreign policy concern?
The Cold War ended in 1990 and is no longer a current foreign policy concern, with the possible exception of North Korea, which is in some ways carrying on the war.
3 What difficulties did you encounter when carrying out your major duties?
Some difficulties I encountered during my major duties included managing conflicting priorities, dealing with unexpected challenges or setbacks, and communicating effectively with team members or stakeholders. These situations required adaptability, problem-solving skills, and clear communication to overcome.
