What are the possible disadvantages of this monetary policy

Reference no: EM133538668

Problem

In 2020, Bank Indonesia (Indonesia's central bank) has injected around Rp 694.87 trillion of additional liquidity into the banking system (through quantitative easing), primarily in the form of lower reserve requirements totalling Rp155 trillion and monetary expansion totalling Rp 524.07 trillion to support the country's economic recovery which has been hard hit by the coronavirus pandemic.

Question A. Using relevant models, illustrate the effect of the monetary policy on: (a) Level of money supply, quantity of loanable funds, and interest rate. (b) Level of investment and output.

Question B. What would be the effect of the monetary policy on Indonesian Rupiah (IDR) exchange rate? Explain.

Question C. What are the possible disadvantages of this monetary policy? Explain.

Reference no: EM133538668

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