ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Monetary policy is a central bank’s actions and communications that manage the money supply. Central banks use monetary policy to prevent inflation, reduce unemployment, and promote moderate long-term interest rates.

Detailed explanation-2: -Central banks use monetary policy to manage economic fluctuations and achieve price stability, which means that inflation is low and stable. Central banks in many advanced economies set explicit inflation targets. Many developing countries also are moving to inflation targeting.

Detailed explanation-3: -Conducting monetary policy The basic approach is simply to change the size of the money supply. This is usually done through open-market operations, in which short-term government debt is exchanged with the private sector.

Detailed explanation-4: -Expansionary Monetary Policy Also known as loose monetary policy, expansionary policy increases the supply of money and credit to generate economic growth. A central bank may deploy an expansionist monetary policy to reduce unemployment and boost growth during hard economic times.

Detailed explanation-5: -Monetary policy is a set of actions to control a nation’s overall money supply and achieve economic growth. Monetary policy strategies include revising interest rates and changing bank reserve requirements.