Question

In: Accounting

control of inflation is the primary goal of the central banks around the world. is it...

control of inflation is the primary goal of the central banks around the world. is it the reason for the developing countries?

Solutions

Expert Solution

The central bank has been described as the "lender of last resort," which means it is responsible for providing its nation's economy with funds when commercial banks cannot cover a supply shortage. In other words, the central bank prevents the country's banking system from failing.

However, the primary goal of central banks is to provide their countries' currencies with price stability by controlling inflation. A central bank also acts as the regulatory authority of a country's monetary policy and is the sole provider and printer of notes and coins in circulation. Time has proved that the central bank can best function in these capacities by remaining independent from government fiscal policy and therefore uninfluenced by the political concerns of any regime. A central bank should also be completely divested of any commercial banking interests.

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

As a result of the global Covid-19 pandemic and lockdown, central banks around the world have...
As a result of the global Covid-19 pandemic and lockdown, central banks around the world have stepped in to provide massive liquidity to the capital markets. Among the key policies are to keep interest rates low or sub-zero (zero interest rate policy or ZIRP). Discuss the implication of such policies to credit risk management from the perspective of adverse selection and moral hazard.
As a result of the global Covid-19 pandemic and lockdown, central banks around the world have...
As a result of the global Covid-19 pandemic and lockdown, central banks around the world have stepped in to provide massive liquidity to the capital markets. Among the key policies are to keep interest rates low or sub-zero (zero interest rate policy or ZIRP). Discuss the implication of such policies to credit risk management from the perspective of adverse selection and moral hazard.                                            
As a result of the global Covid-19 pandemic and lockdown, central banks around the world have...
As a result of the global Covid-19 pandemic and lockdown, central banks around the world have stepped in to provide massive liquidity to the capital markets. Among the key policies are to keep interest rates low or sub-zero (zero interest rate policy or ZIRP). Discuss the implication of such policies to credit risk management from the perspective of adverse selection and moral hazard. （400 words）
As governments and central banks around the world step up efforts to combat covid-19, ramping up...
As governments and central banks around the world step up efforts to combat covid-19, ramping up successions of quantitative easing and fiscal policy, discuss in 300 words, how these measures can affect multinational corporation’s operation in a global context.
What are the tools of monetary control used by central banks, such as the Bank of...
What are the tools of monetary control used by central banks, such as the Bank of England, the European Central Bank? Why cannot central banks fully control the money supply If the central bank wants to increase the money supply with outright open-market operations, what does it do? pleae qicly
A type of deposit product that banks will encourage the customer to purchase whose primary    goal...
A type of deposit product that banks will encourage the customer to purchase whose primary    goal is to save rather than make payments is: Checking account. Non-interest bearing deposit. Non-transaction deposit. Either (a) or (b).
Assume that the Central Bank’s primary goal is to correct a weak economy. How can it...
Assume that the Central Bank’s primary goal is to correct a weak economy. How can it use open market operations to achieve its goal? What is a possible adverse effect of this action by the CB (even if it achieves its goal)?
       Assume that the Fed’s primary goal is to cure inflation. How can it use open...
       Assume that the Fed’s primary goal is to cure inflation. How can it use open market operations to achieve its goal? What is a possible adverse effect of this action by the Fed (even if it achieves its goal)? Show your work by using IS-LM framework. Discuss in details the repercussion of this on the different economic variables such as GDP, Price level, consumption, investment etc..        
If the primary goal is to reduce inflation, which of the following fiscal policy actions would...
If the primary goal is to reduce inflation, which of the following fiscal policy actions would be appropriate during a period of a rapidly increasing consumer price index? I. Reduce government expenditures for defense and nuclear energy research. II. Increase transfer payments to those most severely affected by the rising price index. III. Increase personal income tax rates.
Is the monetary policy reaction curve applicable only to central banks that have an explicit inflation...
Is the monetary policy reaction curve applicable only to central banks that have an explicit inflation target? Explain.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT