Академический Документы
Профессиональный Документы
Культура Документы
The goals of the monetary policy are to control the money supply and set the
inflation rate and the interest rate at a level such that the price stability and
overall trust in the currency are ensured. Also, the monetary policy contributes
towards the economic growth and stability, reduce unemployment and maintain
a predictable exchange rate with other currencies.
2. Selective Credit Controls: Since the objectives of credit control are not
served by the quantitative methods, the economists rely on selective control
methods to fulfill the purpose. The credit objectives may include rationing the
credit, directing the flow of credit from least important sectors to the most
important sectors, controlling a speculating tendency based on the availability of
bank credit. Thus, these objectives are very well served by the selective control
methods. It includes the following monetary measures:
Credit Rationing
Moral Suasion
Although the expansionary monetary policy is useful during the slow period in a
business cycle, it comes with several risks. Such as the economist must know
when the money supply should be expanded so as to avoid its side effects
like inflation. There is often a time lag between the time the policy is made
and the time it is implemented across the economy, so up-to-the-minute
analysis of the policy is quite difficult or impossible. Also, the central bank and
legislators must know when to stop the supply of money in the economy and
apply a Contractionary Policy.