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The economic stabilization Economic growth And developing countries, employment and monetary policy, the Federal effort to maintain price stability. Through control of the money supply in the system. Thus, monetary policy has a role in the stabilization of prices, which affect economic growth. In short, the policy impact on interest rates, which affect demand for the event. Expressed in monetary policy affects the economy in which economic activities can be divided into the following affected will be split between the impact on economic activities covered in this section. And its impact on inflation, which is covered in the last section. . In describing the process by which monetary policy affects the economy, it should be kept in mind that they are far from being a purely to perform their jobs. Predictions about the effect of policy actions, such as economic forecasts are generally under uncertainty. The policy is to make decisions based on the best available information. Realizing These uncertainties . The general principle that interest rates affect aggregate demand and shown in Graph 4 Pattern shown in the graph is a significant change in the trend for measuring range of needs in general has been preceded by a significant change. the level of interest rates. Substantial increases in interest rates designed to restrain inflation, as it was by the contraction of demand. On the other hand, the reduction of interest rates on time growing significantly faster. To. respond to market developments And inflationary pressures Monetary policy can influence demand and economic activity. . We can identify several mechanisms through which these effects occur, which can be grouped under five topics.
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