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Open market operations involves the buying back or selling of government securities. Of the government wants to increase the supply of money it will buy back the securities it has sold to financial institutions in exchange of currency that will then be circulated in the market in the form of investments or lending. If the government wants to decrease the money supply it will sell its securities and holding onto the money that was previously in circulation. Another way to control money supply is to adjust the rate of lending at which the banks can obtain loans from the central bank or other banks. Higher rate will result in low borrowing and hence tightened money supply and vice versa. Lastly, Cash Reserve requirement is also adjusted in order to control money in circulation. Cash reserve is the amount of funds that the financial institutions are required to keep aside. This is a percentage of the total deposits and higher cash reserve requirement allows banks to lend out less funds. Similarly lower cash reserve requirement enables banks to have more funds to lend out.
Unconventional tools of money supply include the central bank’s commitment to keep rates low in the future. Another means is to adjust the central bank’s assets to provide ease in credit through the change in different rates and prices. Third unconventional way is lower the policy rate to zero by supplying reserves that are more than the required rate (Highered.mcgraw-hill.com, 2011).
Money supply is a crucial aspect that determines the value of currency and inflationary measures. Conventional ways are the standard means for the central bank to control money supply. However, if the economic conditions do not permit the central bank to use the conventional means they resort to unconventional means which are effective but not good for the economy in the long run due to their unpredictable and risky nature.
(b) In a 2012 study the International Monetary Fund (IMF) reported that the fiscal
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Standard has already have taken back the ‘AAA’ status that it had once given to the US economy. Predictions of OECD OECD has predicted more trouble for the US economy in the near future. The organization has forecasted shrinkage of the world economy owing to the recent financial crisis that led many US companies to bankruptcy.
Introduction The very recent outburst of the housing price bubble in the most advanced and developed economies of the world has raised in serious concerns about the management of the macroeconomic tools, measures to combat the inflationary pressures especially by the public authorities, as that led to a financial crisis, and the consequences of the financial crisis had to be faced by the global financial economy.
It takes a look at the situation of the oil industry in particular. The paper also examines the role of renewable energy sources such as solar, wind and hydropower. Discussion The world has not weaned itself from its thirst for oil despite several warnings made by oil experts that peak oil is upon us (Deffeyes, 2001:3).
According to Koos and Granata 2008, unemployment is one of the world’s most difficult agenda as it seeks to deter economic growth of a specific country or state and the entire world. Of importance to note is that, countries with a high level of unemployment have the worst economic growth while those that have a low rate of unemployment experience better economic growth (Lange 1998).
“the measure of responsiveness in the quantity demanded for a commodity as a result of change in price of the same commodity” (Wikimedia Foundation, Inc.). It is computed as a percentage change in quantity demanded divided by percentage change in price (About.com).
Real goods refer to market goods, while services refers to payment of interest on loans borrowed, royalties on intellectual property, income earned on international investments, etc. Transfer of payments on the other hand, refers to
s changing its hegemony in manufacturing to service industry or gearing itself to the new economic environment that the global economics is gradually taking shape. Gradually the image of UK’s manufacturing sector became poor because of uncompetitive nature and that lost many
Moynihan and Titley (2001) have said that United Kingdom was the first country to revolutionize. It is the first industrialized country. However, these days the same country has been undergoing de industrialization.
These days it has been
Oil experiences derived demand1. In this respect, its demand refers to the quantity that buyers will desire to buy at various prices. On the other hand, the supply of oil denotes the quantity that producers are willing to take to
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