monetary

Examples of monetary in the following topics:

• Changes in the Monetary Base

  • If the Fed's balance sheet changes, subsequently, both the monetary base and money supply change.
  • Next, we substitute the monetary base formula into Equation 3 because the monetary base equals deposits held by depository institutions plus currency in circulation, or B = D + C.
  • After substituting the monetary base into Equation 3, we yield Equation 4.
  • Total Liabilities = Monetary base (B) + U.S.
  • Equation 6 shows how a change in the Fed's balance sheet affects the monetary base.

• Introduction to Monetary Policy

  • Monetary policy is the process by which a monetary authority controls the money supply, often to produce stable prices and low unemployment.
  • A monetary authority will typically pursue expansionary monetary policy when there is an output gap - that is, a country is producing output at a lower level than its potential output.
  • By contrast, a monetary authority will pursue a contractionary monetary policy when it considers inflation a threat.
  • In response, the monetary authority may reduce the money supply and thereby raise the interest rate.
  • By controlling the money supply, monetary authorities hope to influence the rate of inflation.

• Growth Through Monetary Policy

  • Monetary policy seeks to further economic policy goals through influencing interest rates.
  • By adjusting monetary policy in favor of low interest rates and a large monetary base, the Fed is taking expansionary actions designed to help the United States recover from the recession.
  • Since the 1970s, monetary policy has generally been formed separately from fiscal policy.
  • There are several monetary policy tools available to achieve these ends:
  • The primary tool of monetary policy is open market operations.

• Monetary Policy

  • Monetary policy is the process by which the monetary authority of a country controls the supply of money.
  • Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability.
  • Monetary theory provides insight into how to craft optimal monetary policy.
  • Monetary policy differs from fiscal policy, which refers to taxation, government spending, and associated borrowing.
  • The primary tool of monetary policy is open market operations.

• The Effect of Restrictive Monetary Policy

  • A restrictive monetary policy will generally increase unemployment and decrease inflation.
  • Monetary policy is can be classified as expansionary or restrictive (also called contractionary).
  • Monetary policy focuses on the first two elements.
  • A central bank can enact a contractionary monetary policy several ways.
  • A final method of enacting a contractionary monetary policy is by increasing the reserve requirement.

• Arguments For and Against Fighting Recession with Expansionary Monetary Policy

  • Expansionary monetary policy is traditionally used to try to combat unemployment in a recession by lowering interest rates.
  • Monetary policy, to a great extent, is the management of expectations between interest rates, the price of the use of money, and the total supply of money.
  • When the central bank is in complete control of the money supply, the monetary authority has the ability to alter the money supply and influence the interest rate to achieve policy goals .
  • The increase in the money supply is the primary conduit for expansionary monetary policy.
  • Assess the value of discretionary expansionary monetary policy and the associated shortcomings.

• Monetary Policy

  • Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability.
  • Monetary theory provides insight into how to craft optimal monetary policy.
  • Monetary policy differs from fiscal policy.
  • Furthermore, monetary policies are described as "accommodative" if the interest rate set by the central monetary authority is intended to create economic growth.
  • The primary tool of monetary policy is open market operations.

• The Effect of Expansionary Monetary Policy

  • Monetary policy is referred to as either being expansionary or contractionary.
  • Monetary policy focuses on the first two elements.
  • A central bank can enact an expansionary monetary policy several ways.
  • Another way to enact an expansionary monetary policy is to increase the amount of discount window lending.
  • Another method of enacting a expansionary monetary policy is by decreasing the reserve requirement.

• The International Monetary Structure

  • The international monetary structure involves international institutions, regional trading blocs, private players, and national governments.
  • Certain regional institutions also play a role in the structure of the international monetary system.
  • The Bretton Woods system was the first example of a fully negotiated monetary order intended to govern monetary relations among independent nation-states.
  • NAFTA is also an example of the U.S.' s disproportionate power in determining the direction of the international monetary structure.
  • Explain the role played by the United States over the history of the international monetary structure

• Chapter Questions

  • Explain why open-market operations are such an important monetary tool.
  • Identify the problems in using discount policy as a monetary tool.
  • Explain why reserve requirements are such a powerful monetary tool.
  • What are the time lags, and why do they cause problems for monetary policy?