ECONOMICS
MONETARY POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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control the amount of money in circulation
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control the UK Government’s debt
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control governments’ spending
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control the taxation rate
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Detailed explanation-1: -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-2: -Monetary policy in the United States comprises the Federal Reserve’s actions and communications to promote maximum employment, stable prices, and moderate long-term interest rates–the economic goals the Congress has instructed the Federal Reserve to pursue.
Detailed explanation-3: -We are the UK’s central bank and our job is to get the rate of inflation to our 2% target. We do that by changing interest rates to influence what happens in the economy. When we need to reduce the rate of inflation, we raise interest rates.
Detailed explanation-4: -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.