How Monetary and Fiscal Policies were Implemented during the Recession Essay

How financial and Fiscal Policies were Implemented during the Recession - Essay ExampleIn order to trim this, the government of the get together States, and the international monetary fund, took some micro and macro sparing measures to curb this trend, which led to a great economic down turn. This was achieved by using some monetary and fiscal policies. The monetary process is the process by which the central assert and other capital rendering institutions of a country controls the supply of gold, the availability of money and the cost of money or the interest footstep so that they can achieve a sealed common objective. These objectives are done towards the growth and stability of the economy. The monetary policies can be either the contractionary or the expansionary objective. The aim of the expansionary policy increases the total supply of money in the economy, while the contractionary policies decrease the supply of money in the economy. ... It is the mandate of the feder al reserve of the United States to enact the monetary policies. Board of governors runs the Federal relief. The factors, which they considered and utilise to curb inflationary tendencies, are the reserve requirements, push aside rate, open market operations, and printing money. Most banks in many countries changed the reserve requirements to encourage more(prenominal) banks to start in order to increases the amount of money move in the economy. The central banks of these countries have the authority to change the amount that banks should hold in the central bank so that they can be given the right to operate. In the US, the Federal Reserve has the supremacy to lay the quantity of the deposits that the associate banks can deposit in order to be given the mandate to operate. To curb the recession, the FED decreased the amount of reserve deposits. The motive was to encourage more investors in the banking industry thusly increasing the amount of money circulating in the economy. T his monetary objective achieved its goal since more banks had more money at hand, which increased spending, and possibly inflation (East Tennessee State University web). The other monetary policy use was the discount rate. Discount rate is the discount on the rate of interest rate that the Federal Reserve charges on the banks on the money that they borrow from the Federal Reserve. The central banks decreased or lowered the discount rate during recession. Their objective was to encourage the banks to borrow money from the central banks at a lower rate to increase the amount of money circulating in the economy. This would in turn encourage