Money Policy versus Credit Market - Case Study Example

Easy money policy: To fight recessions, the Fed can use its monetary policy tools to increase the growth of money and credit, which tends to lower interest rates and spur growth of the economy.... Tight money policy: To restrain inflation, the Fed can use its monetary policy tools to reduce the growth of money and credit, which tends to raise interest rates and slow the growth of the economy.... For the easy money policy, first the MS increases which causes the interest rate to decrease which causes the amount of investment to increase....

The two main aspects of monetary policy are the money supply and credit.... The monetary policy in the United States of America is set by the Federal Reserve.... The fiscal policy in the United States is controlled by the Federal government.... Fiscal policy deals with how the government spends its money.... Without businesses the economy becomes stagnant because the money that people earn from their work increase the money supply of an economy....

The large consumption pumps large sums of funds in the market, causing an excess supply of dollars and forcing down the worth of the Yuan to enable Chinese commodities to be further gorgeous in commercial markets.... bonds to be further attractive hence stifle home venturing and spending on the credit basis.... Name Institution Course Instructor Date The Dollar versus the Euro EU affiliates developed the European Monetary Union (EMU) and a European Central Bank (ECB) in concurrence with an attempt to increase the incorporation procedure and to aid protects European funds from the U....

There are real damaging consequences to a modern free market economy from lack of financial inclusion of a certain group of people.... So the banks must design products to capture this market rather than asking this group of people to meet their existing guidelines which may be difficult , if not impossible.... For example , if you are a single mother on welfare , the chances are very good that you do not have a checking account or a credit card and you pay exorbitant rate for cashing a cheque or paying a heavy interest for borrowing money from a loan shark....

Which theory seems to be more appropriate for the economy today? In a closed economy, goods or the… While the output of the economy can be at market equilibrium, the high level of unemployment can be traced back, not from the demand-supply equilibrium in In a closed economy where there is no foreign trade, the level of outputs that are produced will be at market equilibrium as the demand levels will further be met by the supply levels.... This is why in the goods market prices and quantity will settle at the equilibrium but high unemployment can still be present in the economy....

Through this approach, learners have many benefits in linking education demands and the job market skills.... The teacher-student ratio is more favorable, mostly they have a numbers of 1:9 that allows economic value of the parents money.... Education has been taken to be a right, but not a privilege....

The top tranche would be backed up by the assets of the company so that in the event of credit default, the investors can pay off the loan by selling off the assets to recover the investment.... The bottom tranche of USD 60 million does not have any backing even in the event of credit default.... Banks sell these securities with slices and tranches which reflect varying levels of seniority in respect of matching the risk versus rewards profiles of the loans....

(See Table 1 on page 4) The UK government aims to increase the living standards of the lowest-income households by increasing the benefit levels for those who are unemployed and to introduce the working families' tax credit in those that are employed.... The paper "Rationale on Tax Reforms and Benefit System Undertaken since Labour Come to Power in 1997" highlights that not all the people who are unemployed; are not looking for employment....