Monetary Policy
Monetary Policy : A part of the government's economic policy, which regulates the level of money (liquidity) in the economy. It has the desired objective of controlling inflation, improving the balance of payments, reducing unemployment and raising the gross national product. This policy is primarily executed through the Central Bank, and employs the methods of: Open Market Operations - The buying and selling of securities. Here, the government trades in the stock market/securities exchange. The Discount Rate: The interest rate at which the Central Bank advances money to the commercial banks. The Reserve Ratio - The quantity of money which the law requires commercial banks to deposit with the Central Bank. Selective Credit Controls - A set of 'credit measures', Which are designed to control consumer spending? The Interest Rate - The rate at which commercial banks lend money to the public. Moral Suasion - The act of government appealing to the citizenry, for 'restraint' in practices which can negatively impact on the economy
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