Question

Monetary policy works to stabilize economic conditions by using three tools to increase or reduce the money supply: reserve requirements, interest rates, and open market conditions. Some economists believe that monetary policy is a short-term solution to a long-term problem, and that people will eventually regret artificially stimulating the economy.

To complete the Discussion activity, write a post that answers the following questions:

• Describe your opinion of the use of monetary policy.
• Do you think it should be used at all? Explain.
• What would be the consequences of eliminating monetary policy, and why?
• What are the long-term consequences of keeping monetary policy? Explain.

Answer 1

And The moneiay poicg uhlizes thaee devles to increment oo decline the cash ave as pea the fellowing Resea ve Requidement supply in the economy, there The nahonal bark oe a nation Sets a save necessity dte, trhhİch each business bank needs to reep coith it Not following the vequests would wompt undoing of managing an acount peamit on aubstantial punish ment At ihe poirt when aional bonk diminishes the hold neessity pate at the point bank can tihize ten abundance saue to loan cach to oveaal population, aciovding ly expanding the cash supply in the econony

Interest Rates when central bank incraases the inteves vates then it becomes castlg to tonoio money feom Cenhal ban k. So, the commencial bart would borw les tom centhai baxk and hian lending to geneval public decréases in the aconomy. The money aupply falls. Open Mastal pesatons These openation invatves seling and buging bond cennal bank in the open maoket.when centrąl bonk wants to increase the money supply in the maaket, it stoots buyjing the bonds in the oper ncuket and gives money in the exchange

This increases the money Supply in the mwoel Opinion egarding the use of monetay policy- The monetany poleg is in poafant fs an Economy and heps the eronomy to stabilize Strendh en and grow coith the est of the woold gnce, money is a medum of exchange and an impootant need to conduct an econonlc hansacto So the mecharicm to central the money,ie an eonong

Yes, t shauld be uwed by eeay ao nomg to mainoin the money supply in the ecorony Howeves he uoage depends cpon the nedc of a coumg. If they need a plaon th ghoot oun then they need a monetany, policy,o exam ple he infiaton can be bwsed doon by decreasng the money supply.Ecesive use af money Supple Can cause potleme. fa exantle, by ncteasing the money upply Aggpe gate se demand oises Ord gdp ales, bud one shoud rot c it esi enduely beraue it could lead to hureoinMaton

) consequences ot eliminatn Monelary Polcy If monetay Pelicy would be eliminated ipen it can cause eslous poodems in the conomg because the poimay need of an economy conduct an economg transackon is momgy, he mechanism to contol the mony i removed hen how con an economy function propeT4า The Wree eono my tops functoninm, the banks are of no ue The monetaby Poliay is impootant to conduct impovfant economc transacfions, toi deve lopmen t policies, etc. we cannot imagine an economy to withocd monelany policg