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 […]

Expansionary Monetary Policy to manage Recession or Depression

When the economy is faced with recession or involuntary cyclical unemployment, which comes due to fall in aggregate demand, the central bank intervenes to cure such a situation. Central bank takes steps to expand the money supply in the economy and lower the rate of interest with a view to increase the aggregate demand that […]

Importance/Objectives of Monetary Policy in Developing Countries

The citizen like inflation, deflation, lack of employment opportunity, investment, output income etc defines developing country as a country where different types of economical and social harms are facing. In developing countries various types of economical problems are solved through the monetary policy. Monetary policy influences most of all inexpensive variables and activities through change […]

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 […]

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 to make different types of […]

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 […]