Explain the tools that exist in expansive monetary policy

Reference no: EM133474284

Case: Faced with unstable economic growth due to a recession or accelerating inflation, the Fed uses the open market operation to increase or decrease the available reserves of commercial banks, which, in turn, will affect the amount of money available in the economy. In addition to open market operation, the Fed has other tools to promote a country's economic growth, sustainability, and stability. These tools have been used historically; an apt example was the 2008 mortgage debt crisis.

Question 1. I must explain monetary policy, its role, and its effects on short- and long-term economic fluctuations. It uses the aggregate supply and demand model presented in the course.

Question 2. I must explain the tools that exist in expansive monetary policy and contractive monetary policy.

Question 3. I must express in detail the effects of expansionary and contractionary monetary policy on income and the price level.

Question 4. Based on the premise presented, I must argue about the intervention of monetary policy as an instrument to promote a country's growth, sustainability, and economic stability. (Give an example in detail.)

Reference no: EM133474284

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