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What are the basic objectives of monetary policy? Business & Marketing
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What are the basic objectives of monetary policy? Comment on the cause-effect chain through which monetary policy is made effective. What are the major strengths of monetary policy?
forum of 250 words.
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Monetary Policy
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Monetary Policy
Monetary policy can be defined as the process of controlling the supply of money and credit to boost the performance of the economy. It has three major objectives. The first objective is to control inflation. It is one of the most common methods used by the government to control inflation. In monetary policy, the central bank increases the interest rates on borrowings for commercial bank to reduce the supply of money in the market. The strategy later controls the rate of inflation.
The second objective of money policy is to manage the levels of employment. Monetary policy reduces the rates of government funds, which, in turn, result in stronger demands for goods and services....
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