Explain transmission mechanism for contractionary monetary
policy. In your explanation, you should clearly refer to market...
Explain transmission mechanism for contractionary monetary
policy. In your explanation, you should clearly refer to market of
money, foreign exchange markets, and AS-AD model and use class
terminology.
macroeconomics
Explain the purpose of
a contractionary monetary policy. Using relevant diagrams, explain
the transmission mechanism of Open Market Operations when the
central bank carries out a contractionary monetary policy.
Explain the steps in the policy transmission mechanism
(separately) for monetary and fiscal policy, making sure to
reference the important role of both the interest elasticity of
money demand and the interest elasticity of investment demand in
the transmission mechanism.
Briefly explain the concept "monetary policy transmission
mechanism" and then illustrate how changes in interest rates impact
on your business organisation. Substantiate your answer fully.
Monetary Policy: There are two types of Monetary policies:
Expansionary monetary policy and contractionary monetary
policy.
Key-Questions:
1. Explain each of the key terms in not more than one or two
sentences (give formula or examples whichever is applicable):
(a) Overnight rate of interest (b) Bank rate (c) Money
multiplier (d) open market operations.
2. Discuss about the impact of each policy on the supply of
money and inflation with suitable explanation and example.
3. Give a graphical explanation of...
2. Review Ch13.2 the monetary transmission mechanism: monetary
policy has lots of different channel for operation; please describe
an advantage and a disadvantage of this fact.
Explain the most recent monetary policy move by the Fed. Is this
expansionary or contractionary policy? Why did the Fed choose to
pursue this policy? What impacts of this policy do you observe? For
best results, look up recent FOMC announcements.
This must be a real-life response regarding the United
States.