Question

Homework # 5
1-Explain how the central bank conduct monetary policy by targeting the federal fund rate, and through open market operation.
2- Explain the non-conventional monetary policy: the quantifying easining.

Homework # 6
Briefly talk about the differences between monetarist monetary policy and Keynesian monetary policy.

Answer 1

The central bank conducts monetary policy by targeting the federal funds rate and through open market operation in the following manner.
monetary policy is basically a policy of controlling the inflationary and deflationary situation in the economy and it is a good policy to maintain price stability in the economy.
The monetary policy includes the quantitative measures and the qualitative measures via the bank rate the CRR the SLR reparate reverse reparate are you mean instruments which are helpful in the control of inflation and deflation in the economy.
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The monetary policy target towards the federal country means the rate which is useful for the certainty in the fixation of loan and it decides the level of investment in the economy.
If the government wants to control the loan then under the monetary policy the rate of the Federal fund will increase and reverse in the case then the government wants to provide a loan to the investor.
The open market situation where there are a sale and purchase of government bonds and securities the economy the case of inflation government sell the securities at good interest rates so that it reduces the money supply in the economy and at the time of deflation government to start purchasing the securities and give good money to the investors, therefore, the open market operation is a monetary tool which is helpful in the control of access to Manan deficit demand situation in the colony

Ans 2: quantifying evening is that form of unconventional monetary policies where the central bank is going to purchase the long-term securities from the open market and here the purpose is to increase the money supply and to encourage the investment and the lending services.
Buying of the securities add or increases the money supply in the economy and also works to lower down the interest rate by beating up the securities on the basis of fixed income and in this case there is the expansion of the balance sheet of the central bank.