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Hi, need to submit a 500 words essay on the topic Monetary Economics College.Download file to see previous pages... This means that the Fed have set their rates at very low levels in the last ten year
Hi, need to submit a 500 words essay on the topic Monetary Economics College.
Download file to see previous pages...This means that the Fed have set their rates at very low levels in the last ten years, this is policy measure to encourage investment and also to check inflation, therefore the statement is true.
Inflation, money supply and debts are related, when monetary policy measures are aimed at increasing money supply then interest rates are reduced and this will definitely increase money supply where investors borrow more from the bank, therefore money supply plays a role in solving problems of inflation, deflation and economic growth.
In order to solve problems of high inflation in the economy monetary policy makers will increase interest rates, as a result of this there will be a decline in the amount available for investors to borrow, rational investors will also not borrow more due to the increased cost of debts caused by the increase in interest rates.
Poor economic growth can also be solved through debts. this means that the banks will make more money available to investors at low interest rates which will encourage investors to borrow, more investments means that the level of output and employment will increase in the economy.
