Monetary policy is an important aspect of financial strategy that maintains macrostabilization, and in so doing has a strong effect on poverty. The effort of the central bank to manipulate the money supply and interest rates in accordance with financial targets is known as monetary policy. An increase or decrease in the monetary supply is an influential factor on product and price levels.

When determining monetary policy targets, macroeconomic conditions are taken into account. In situations in which recessionist tendencies are seen, loose monetary policy is adopted; in situations in which inflationary tendencies are seen, tight monetary policy is applied. Along with this, excessive expansionary monetary policy leads to inflation and distorts income distribution. Monetary policy that is too tight increases unemployment and causes recession. Proper ...

  • Loading...
locked icon

Sign in to access this content

Get a 30 day FREE TRIAL

  • Watch videos from a variety of sources bringing classroom topics to life
  • Read modern, diverse business cases
  • Explore hundreds of books and reference titles