ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Central banks conduct monetary policy by adjusting the supply of money, usually through buying or selling securities in the open market. Open market operations affect short-term interest rates, which in turn influence longer-term rates and economic activity.

Detailed explanation-2: -Monetary policy is the control of the quantity of money available in an economy and the channels by which new money is supplied. Economic statistics such as gross domestic product (GDP), the rate of inflation, and industry and sector-specific growth rates influence monetary policy strategy.

Detailed explanation-3: -The price level where the supply of money equals demand for it is the equilibrium price, which tends to be stable unless some outside factor changes demand or supply. In other words, prices will be stable when people have no more money or no less money than they need to make the purchases they want to make.

Detailed explanation-4: -Monetary policy refers to central bank activities that are directed toward influencing the quantity of money and credit in an economy. By contrast, fiscal policy refers to the government’s decisions about taxation and spending. Both monetary and fiscal policies are used to regulate economic activity over time.