ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Contractionary monetary policy includes selling government bonds, increasing the reserve requirement, and increasing the federal funds interest rate.

Detailed explanation-2: -It is a macroeconomic tool used to combat rising inflation. The main contractionary policies employed by the United States government include raising interest rates, increasing bank reserve requirements, and selling government securities.

Detailed explanation-3: -What we use monetary policy for. Monetary policy affects how much prices are rising – called the rate of inflation. We set monetary policy to achieve the Government’s target of keeping inflation at 2%. Low and stable inflation is good for the UK’s economy and it is our main monetary policy aim.

Detailed explanation-4: -The Bank of England Act 1998 gives the Bank of England operational responsibility for setting monetary policy to meet the Government’s inflation target. Operational decisions are taken by the Bank’s Monetary Policy Committee.