Countries across the globe feel the need and impact of proper monetary policy. The policy has the power to both uplift and cripple a country’s economy. For example, in recent news, a State Street strategist warned about a recession in the US if the country imposes tighter monetary policy.
Economists are the ones we all look up to in such situations. So, when you choose to pursue economics, you must also understand the responsibilities bestowed on you. Hiring an assignment helper might get the job done in college, but you need to be well-versed with all the aspects to have a successful career.
Major economics assignment help websites like Myassignmenthelp.com have listed some key points essential for proper monetary policy analysis in economics assignments. Let’s take a deep dive and understand all the different aspects.
Goals of Monetary Policy
Proper analysis is the key to great economics assignments. While getting a free assignment solution from websites like Myassignmenthelp.com is easy, it is equally important to understand what the policy aims to do. Here’s a look into what monetary policy aims to do:
- Inflation
Inflation is a rising concern globally. The only way to keep things under control is by establishing rules and putting the different policies into action. Monetary policy aims to reduce the level of money circulating in the market. It can help you keep things under control. When you write an assignment, you must understand these things to explain your points and share your insights for better grades in the papers.
- Unemployment
You cannot overlook the problem of unemployment in the world. Further, the massive layoffs in major MNCs add up to the worries. Monetary policy can help curb the problems and give countries and individuals a ray of hope. The expansionary monetary policy can decrease unemployment as it helps increase money policy and attractive interest rates to stimulate business activities and expand job markets.
- Exchange rates
Monetary policy has an effect on the exchange rates. If you keep track, you will understand how the rates keep changing every day depending on the money supply. The monetary policy needs to be established in a way that keeps things stable in countries and no one has a problem doing business or traveling to countries.
Since monetary policy has a major role in all the things concerning the economy, you need to know the tools that help keep things under control. The following section will help you familiarize yourself with the various tools.
Tools of Monetary Policy
Governments cannot keep things under control by framing policies. They have to act on them to ensure to avoid any irregularities. While it is not always possible to control these things, there are a few things that help governments keep a check on the economy and ensure there’s no major deviation from standardized norms. Here are a few tools of monetary policy you must know:
- Open market opportunities
Open market operations take into account the buying and selling of bonds. Governments take initiatives to buy bonds from investors or sell additional bonds to bring a change in the number of outstanding government securities and the money that is available for the country. The process aims to maintain a balance between the level of reserve balances to keep a check on short-term interest rates and the ones affecting interest rates.
- Interest rates
If you follow the news regularly, you will often come across information where the central bank of a country amends its interest rates. Most of you ignore the news and don’t understand how it might have an impact on the economy. But this is a way to balance things out and makes it easier for banks to offer loans to people. As an economics student, you must understand what this means and implement it correctly in your assignments.
- Reserve requirements
There’s a need to track funds that banks must retain in order to keep things under control. You would see banks charging a small amount to keep your money. This is how they keep a certain proportion of the money with them to make sure they meet the liabilities. If the reserve requirements are lowered, banks would get more capital to help them offer loans and buy other assets. On the other hand, if that is increased, it will restrict banks from offering loans and slow down growth.
Final thoughts,
The need to understand monetary policy is important to ensure you have a perfect assignment. There are instances where students are assigned tasks to analyze a specific country’s monetary policy. Knowing all the things mentioned above will help you find perfect solutions and get things done on time.