Monetary or monetary policy is the macroeconomic policy of monetary authorities, a set of measures aimed at managing aggregate demand through the terms of the money market (short-term interest rate, nominal exchange rate or current liquidity level of the banking sector) to achieve a combination of ultimate goals, which could include price stability, maintaining a stable exchange rate, financial stability and promoting a balanced economic growth. The history of the term "monetary policy" originates
the Keynesian economics during the 1930s in an attempt to understand the Great Depression. Keynes prefers that lower taxes and increase government spending or expenditure to increase the demand and make the global economy out of the depression. The theory of the Keynesian economics is the view in the short run, during recessions, economic output is strongly influenced by aggregate demand. Aggregate demand does not necessarily same with the productive capacity of the economy, view by the Keynesian economics;
Causes of Inflation Demand-pull inflation states that the economy demands additional goods and services than is obtainable. This absence of resource enables vendors to elevate costs until a balance is put in place amid supply and demand. The cost-push theory, or "supply shock inflation", says that shortages to the available supply of a specific good or product will result in a rippling effect through the economy by elevating prices via the supply chain from the manufacturer to the customer. One can see
1 INTRODUCTION The great depression has been argued to have been caused by many factors. The frequently used argument is the global imbalance reflected by economic policies of East Asian countries. However, in the unexpected global financial crisis, Justin Yifu Lin argues global imbalance resulted from increased demand in the US from recent international wars and tax cuts. In addition to this, over consumption by households supported by wealth effect from the housing bubble. This is explained by
avoiding the boom-bust cycle, which is the (recession phase). Continuing fiscal policy have two forms that we distinguish between they are either (contractionary , or expansionary) .And according to the article statement , the fiscal policy that should be used will be expansionary fiscal . (EFP) has taken a place within the UAE, and that’s due to governance high spending to increase oil production over the years. This policy is defined as a macroeconomic or fiscal form that is used to promote higher
an economist that criticized the classical view of macroeconomics. In his book the general theory of employment, interest and money (1936) Keynes rejects the classical argument that markets would clear and believed it was unable to explain the causes of the harsh worldwide economic crash or provide sufficient public policy solutions to advocate production and employment. The main objective of Keynes’s theory is the arguments that aggregate demand—measured as the amount of expenditure by households
bought more than $600 billion in long-term Treasury Bonds and reinvested almost another $300 billion from mortgage-backed securities into other Treasury securities. In total, well over $900 billion was spent in the Federal Reserve's QE2 efforts. The theory behind this effort was that the yields would be driven down on Treasury securities and bonds while people would begin to spend more on consumption and investment activities in the domestic economy of
Among the various cornerstones of macroeconomic theory, one finds Inflation held at high helm of affairs. There is a vast literature spanning across centuries treating the subject matter and as usual with epochs the meaning and significance of the word “Inflation” seems to have changed. For many years the word Inflation was not a statement about prices rather a condition of paper money, which is a description about monetary policy. A testimony of it can be seen via these two quotes: Inflation is
The effects of 9/11 on the US economy can be broadly divided into two categories: the short run economic effects the long-term effect on government policy and various industries. The first of these two categories was immensely impacted by the attacks and the widespread repercussions for economic activity, market confidence, and unemployment. The effects in the long-term, however, were not nearly as profound. As shown by the fairly rapid recovery after the attacks. Furthermore, a large portion of
liberalization impossible. United states was the very first country took advantage of capital account liberalization. as after the collapse of Bretton Woods system, dollar was no longer set to gold and Federal Reserve started inflation targeting policy, meaning Federal Reserve of US could issue more money to prevent deflation. Hereafter US turned from a supporter of capital controls as a promoter of capital