BUSINESS ADMINISTRATION
BUSINESS ECONOMICS
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
monitor government spending.
|
|
|
supervise the banking system.
|
|
|
issue new currency.
|
|
|
regulate the economy.
|
Detailed explanation-1: -The main objective of the monetary policy is to enable price stability, controlled expansion of bank credit and money supply, increase the productivity of fixed investments and equitable distribution of credit to all sectors of the economy.
Detailed explanation-2: -“…the primary objective of monetary policy is to maintain price stability while keeping in mind the objective of growth.”
Detailed explanation-3: -Central banks have four main monetary policy tools: the reserve requirement, open market operations, the discount rate, and interest on reserves.
Detailed explanation-4: -Central banks use monetary policy to manage the supply of money in a country’s economy. With monetary policy, a central bank increases or decreases the amount of currency and credit in circulation, in a continuing effort to keep inflation, growth and employment on track.
Detailed explanation-5: -The Fed has traditionally used three tools to conduct monetary policy: reserve requirements, the discount rate, and open market operations. In 2008, the Fed added paying interest on reserve balances held at Reserve Banks to its monetary policy toolkit.