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3 years ago

What does monatary policy do

Business

2 answers:

mezya [45]3 years ago

6 0

Answer:

Monetary policy consists of management of money supply and interest rates, aimed at achieving macroeconomic objectives such as controlling inflation, consumption, growth, and liquidity.

Elena-2011 [213]3 years ago

3 0

The monetary policy regulates cash supply, controls inflation, adjusts interest rates to regulate the market, and money costs

Explanation:

Monetary policies raise flexibility in order to produce economic development. This reduces money to prevent inflation.

Three objectives of monetary policy:

Inflation is the most important thing.

The second aim is to reduce unemployment, but only after inflation has been controlled.

Thirdly, low long-term interests rates should be encouraged.

The four tools to fulfil monetary policy goals:

Risk-Free rate: Federal Reserve discount funding complements monetary policy to the federal fund's goal, which provides commercial banks with backup liquidity.

Capital requirements: The amounts of funds that lenders have to hold in cash or on loan in their containers at reserve banks.

Market Activities: U.S. government bond purchase and selling has been a trustworthy device.

Reserve interest: Excess funds kept at Reserve Banks were charged for interest on deposits.

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The gas station on the edge of town has gas that is 30c/gallon cheaper than my local station. I buy 10 gallons of gas a week. As

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Answer:

Explanation:

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4 years ago

Why do you think entrepreneurship is important to the economy?

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3 years ago

What portion of discretionary spending is typically spent on defense?

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3 years ago

Read 2 more answers

Let's say you want to open a shoe store that will specialize in high-end shoes. But before you do, you want to determine how man

sveta [45]

Answer:

$240,000

Explanation:

Selling price per pair of shoes $160 x 12,000 ...1,920,000

Cost (to you) per pair of shoes $80 x 12,000 .... $960,000

Sales commission per pair $10 x 12,000.......... $120,000

Salaries ..........................................................................$420,000

Rent................................................................................ $120,000,

Advertising..................................................................... $20,000,

Insurance .........................................................................$16,000,

Miscellaneous fixed costs ..........................................$24,000,

Profit ..............................................................................$240,000

6 0

4 years ago

cpnsider capm the risk free rate is ^5 and the expected return on the market is 18% what is the expected return on a stock with

borishaifa [10]

Answer:

Expected return = 21.9 %

Explanation:

The capital asset pricing model is a risk-based model. Here, the return on equity is dependent on the level of reaction of the the equity to changes in the return on a market portfolio. These changes are captured as systematic risk. The magnitude by which a stock is affected by systematic risk is measured by beta.

Under CAPM, Ke= Rf + β(Rm-Rf)

Rf-risk-free rate (long-term i.e 10 year treasury bill rate), β= Beta, Rm= Return on market., Ke- Return on equity (cost of equity)

This model can be used to work out the cost of equity as follows:

Ke= Rf + β (Rm-Rf)

Rf- 5%, β= 1.3, Rm- 18, E(r)- ?

Ke = 5% + 1.3×(18-5)%=21.9 %

Ke = 21.9 %

Expected return = 21.9 %

5 0

4 years ago