implementing monetary policy (1 Viewer)

[baraka003]

what is the simplest and clearest way to demonstarte this.

i understand it and all, its just a class competition and wondering what other peoples thoughts are

 

[Zak Ambrose]

an allegory would explain it in simple terms.

 

[williamc]

buying and selling of government bonds to influence some variable factors (namely investment), which will in turn, help maintain a stable inflation rate and to which, maximise output without putting inflation through the roof.

or a short term macroeconomic fixer

 

[baraka003]

allegory?

 

[Meepo]

Domestic Market Operations (main instrument in MP) = the buying and selling of commonwealth government securities to influence the cash rate and the general level of interest rates.

Contractionary stance (tightening) : RBA sells government securities = shortage of borrowable funds = increase in cash rates = increase in interest rates.

Expansionary stance (loosening) : RBA buys government securities= excess of borrowable funds = decrease in cash rates = decrease in interest rates.

The objective of tightening is to decrease the supply of money and credit in the economy to SLOW down economic growth.

The objective of loosening is to increase the supply of money and credit in the economy to SPEED up the economic growth.

 

[gnrlies]

what is the simplest and clearest way to demonstarte this.

i understand it and all, its just a class competition and wondering what other peoples thoughts are

Im not sure what you want. If you understand it, what do you want from us?

 

[Lorie]

quick and easy........

Manipulation of the price of money (interest rates) through controlling the supply of money (buying/selling govt bonds).

 

[zeleboy]

quick and easy........

Manipulation of the price of money (interest rates) through controlling the supply of money (buying/selling govt bonds).

Should throw 'targetting inflation/sustaining inflationary pressures' in there