The monetary policy regards the influence of the demand and supply for money over the interest rates as well as other tools of monetary policy. The aim of the monetary policy is to achieve a low inflation. Macro-Poland is presently going through a recession, the investment and consumption are very sluggish with unemployment being quite high at nine percent. To check Monetary policy describes the way that central banks work to reach desired macroeconomic policy goals including overall price stability, total employment, and consistent economic growth. The Federal Reserve of the United States has certain macroeconomic goals set by Congress such as reaching full employment and ultimate price stability (Economic Outlook, 40 Monetary policy Essays. 4 essay samples found. GDP and Unemployment. The gross domestic product (GDP) is the measure of goods and services produced in a country during a year (Boone ). When GDP is increasing, the economy is in expansion mode. When GDP is decreasing, the economy is in a recession
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This enactment followed the harsh financial monetary policy essay that monetary policy essay hit the country. Over the years, the Federal Reserve System has changed into a large institution that performs monetary roles and responsibilities. The Federal Reserve System serves as the central banking system of the American economy, monetary policy essay. Therefore, the Federal Reserve stabilizes prices to ensure reasonable interest rates in the economy. Employment opportunities also increase through proper implementation of the Federal Reserve System.
The paper presents the major tools that the Federal Reserve System can use to boost the US economy. Besides, the study offers some recommendations that Fed can adopt to perfect its mission. The major tool that the Federal Reserve can use to influence the economy is the open market operation. A committee created by the Fed administers the open market operations to implement the monetary policy, monetary policy essay. Open market operations refer to selling and buying of government securities to influence interest rates on a short-term basis.
The growth monetary policy essay money and credit in the economy arises from the influence of the open market operations in the United States. The Fed plays the role of a lender to financial institutions to enable them meet short-term financial needs. It offers them loans on a discount to ensure the stability of reserve supply and demand, monetary policy essay, thereby affecting the economy in a positive way.
In addition, Fed uses other approaches such as controlling reserve requirement and discount rates to boost the economy. When the stored money is reduced, economic output goes up in a country since financial institutions have enough funds to give. The reserve requirement is the amount of funds that the Fed requires all financial institutions to hold for purposes of lending when any need arises, monetary policy essay.
Moreover, the Fed remains in control of charges, which comprise the interest rates that banking institutions pay for loans that they get from the central banks. When faced with a high-interest rate environment, the Federal Reserve System can adopt considerable measures that promote economic growth in the quest to prevent severe financial crises such as the great depression that once hit the United States.
In my opinion, the Fed can adopt suitable monetary monetary policy essay to deal with high-interest rates to promote GDP growth. Since factors such as demand and supply of money are the major determinants of interest rates, they play a vital role in promoting economic growth.
A high interest rate environment results from an increasing demand for money. To ensure economic growth, the Fed will need to implement measures that maintain a favorable demand for money such as ensuring that the right amount of money is in circulation. Expansionary monetary policies are necessary in a high-interest rate environment to promote GDP growth because expansionary financial guidelines increase the supply of money in the economy, thus reducing unemployment and lowering the interest rates.
The significant role played by the Federal Reserve System ensures economic growth by controlling the GDP. Hubbard, G. New Jersey, NJ: Pearson Educational Incorporated Publishers. Need a custom Essay sample written from scratch by professional specifically for you? certified writers online. Select a website referencing style:. Monetary Policy. Table of Contents.
Explanation of the Federal Reserve Tools the Federal Reserve can use to boost the Economy Recommendations to the Fed Reference. Learn More. We will write a custom Essay on Monetary Policy specifically for you! This essay on Monetary Policy was written and submitted by your fellow student.
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Monetary policy Essays. 4 essay samples found. GDP and Unemployment. The gross domestic product (GDP) is the measure of goods and services produced in a country during a year (Boone ). When GDP is increasing, the economy is in expansion mode. When GDP is decreasing, the economy is in a recession Monetary Policy Essay. (No Ratings Yet) Table of Contents. Explanation of the Federal Reserve. Tools the Federal Reserve can use to boost the Economy. Recommendations to the Fed. Reference. We will write a custom Essay on Monetary Policy specifically for you. for only $ $11/page Monetary policy is the process of drafting, announcing, and implementing the plan of actions taken by the central bank, currency board, or other competent monetary authority of a country that
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