Contraction Monetary Policy to manage Inflation

When aggregate demands rises sharply due to large consumption and investment expenditure or more importantly, due to the large increase in government expenditure relative to its revenue resulting in huge budge deficits, a demand-pull inflation occurs in the economy. Besides, when there is too much creation of money for one reason or the other, it […]

Objectives of Monetary Policy

Monetary policy is one of the great tools to stabilize the economic systems. It contains the following objectives: (i)   Price constancy: The most important objective of monetary policy is to establish internal price stability. Stable price does not means that the average of prices on the general price level should not be allowed to fluctuate […]

MONETARY POLICY

   Concept of Monetary Policy Monetary policy is one of the successful macro-economic policies. It has important role for in general economic management and growth. Monetary policy is the work out of the central bank to control over the money supply as a tool for achieving the objectives of universal economic policy. Monetary policies attempt […]

Implication/Objectives of Fiscal Policy

Fiscal policy plays a dynamic role in developing countries. The monetary policy alone ineffective due to the existence of underdeveloped money and capital markets, fiscal policy can be used as an important adjusts to monetary policy in accelerating the rate of capital formation. In modern time, optimum allocation of resources, price stability, equitable distribution of […]

  Purpose of Fiscal Policy

    In modern times, the objectives of fiscal policy are as follows: (i)   Best possible provision of Resources: One of the main objectives of fiscal policy in developing countries is to mobilize economic resources. It should be formulated so as to secure use and optimum allocation of economic resources like money, men and material. This […]

FISCAL POLICY

Concept of Fiscal Policy Fiscal policy is concerned with the revenue and expenditure of the government, which is careful as a powerful device for stabilization. It refers to the budgetary policy of the government. This has become an extremely important tool of the government to preserve economic stability, economic growth, high employment, and balance of […]

Cost-Push Inflation

Cost-push inflation is also called “supply shock inflation”, caused by drops in aggregate supply due to increased prices of inputs, for example. Take for instance a sudden decrease in the supply of oil which would increase oil prices. Producers for whom oil is a part of their costs could then pass this on to consumers […]

Remedies or measures to Control Inflation

Today most central banks are tasked with keeping inflation at a low level, normally 2 to 3% per annum within the targeted low inflation range which could range from 2 to 6% per annum. It has been noted that inflation inflicts much suffering on the helpless people and disrupts society economically, socially, morally and politically. […]

Concept and Definition of Inflation

In general, inflation means the increase in general price level or decrease in purchasing power of money (or value of money). Inflation usually refers to a general rise in the level of prices of goods and services over a period of time. This is also referred to as price inflation. The term inflation originally referred […]

INFLATION & DEFLATION

Concept and Definition of Inflation In general, inflation means the increase in general price level or decrease in purchasing power of money (or value of money). Inflation usually refers to a general rise in the level of prices of goods and services over a period of time. This is also referred to as price inflation. […]