What Is Monetary Policy? Explain the General Objectives of Monetary Policy.
What is Monetary policy? Explain the general objectives of monetary policy.
103 days ago by Galaxy Edu Planet 0
Q. What is Monetary policy? Explain the general objectives of monetary policy. Answer: Monetary Policy
Monetary policy is a part overall economic policy of a country. It is employed by the government as an effective tool to promote economic stability and achieve certain predetermined objectives.
Meaning and Definition:
Monetary Policy deals with the total money supply and its management in an economy. It is essentially a programme of action undertaken by the monetary authorities generally the central bank to control and regulate the supply of money with the public and the flow of credit with a view to achieving economic stability and certain predetermined macroeconomic goals.
Monetary policy can be explained in two different ways
In a narrow sense, it is concerned with administering and controlling a country’s money supply including currency notes and coins, credit money, level of interest rates and managing the exchange rates.
In a broader sense, monetary policy deals with all those monetary and non-monetary measures and decisions that affect the total money supply and its circulation in an economy. It also includes several non-monetary measures like wages and price control, income policy, budgetary operations taken by the government which indirectly influence the monetary situations in an economy. General Objectives of Monetary Policy
1. Neutral money policy:
Prof. Wicksteed, Hayak, Robertson and others have advocated this policy. This objective was in vogue during the days of gold standard. According to this policy, money is only a technical devise having no other role to play. It should be a passive factor having only one function, namely to facilitate exchange. It should not inject any disturbances. It should be neutral in its effects on prices, income, output, and employment. They considered that changes in total money supply are the root
103 days ago by Galaxy Edu Planet 0
Q. What is Monetary policy? Explain the general objectives of monetary policy. Answer: Monetary Policy
Monetary policy is a part overall economic policy of a country. It is employed by the government as an effective tool to promote economic stability and achieve certain predetermined objectives.
Meaning and Definition:
Monetary Policy deals with the total money supply and its management in an economy. It is essentially a programme of action undertaken by the monetary authorities generally the central bank to control and regulate the supply of money with the public and the flow of credit with a view to achieving economic stability and certain predetermined macroeconomic goals.
Monetary policy can be explained in two different ways
In a narrow sense, it is concerned with administering and controlling a country’s money supply including currency notes and coins, credit money, level of interest rates and managing the exchange rates.
In a broader sense, monetary policy deals with all those monetary and non-monetary measures and decisions that affect the total money supply and its circulation in an economy. It also includes several non-monetary measures like wages and price control, income policy, budgetary operations taken by the government which indirectly influence the monetary situations in an economy. General Objectives of Monetary Policy
1. Neutral money policy:
Prof. Wicksteed, Hayak, Robertson and others have advocated this policy. This objective was in vogue during the days of gold standard. According to this policy, money is only a technical devise having no other role to play. It should be a passive factor having only one function, namely to facilitate exchange. It should not inject any disturbances. It should be neutral in its effects on prices, income, output, and employment. They considered that changes in total money supply are the root