Role of monetary policy in economic stability from "summary" of Oswaal NCERT One For All for UPSC & State PSC's Indian Economy Classes-9 to 12 (Old & New NCERT Edition) (For 2023 Exam) by Oswaal Editorial Board
Monetary policy plays a crucial role in maintaining economic stability by influencing the money supply, interest rates, and inflation levels in an economy. In simple terms, it involves the actions taken by a country's central bank to regulate the supply of money and credit in the economy. By adjusting key policy rates such as the repo rate and reverse repo rate, the central bank can control the flow of money in the economy. When the central bank wants to stimulate economic growth, it may lower interest rates to encourage borrowing and spending. This can lead to increased investment, consumption, and overall economic activity. On the other hand, if the central bank wants to curb inflation, it may raise interest rates to reduce borrowing and spending, thereby slow...
Similar Posts
Bitcoin is decentralized and limited in supply
Bitcoin's decentralization means that no single entity has control over its network or supply. This is in stark contrast to the...
Sovereign wealth funds are governmentowned investment funds
Sovereign wealth funds are unique entities that are owned and operated by governments. These investment funds are created with ...
Real assets like real estate can also be a safe haven during bear markets
It's important to remember that when the stock market is heading south, real assets like real estate can provide a safe haven f...
Financial regulations aim to protect investors and maintain stability
Financial regulations are put in place with the primary objective of safeguarding investors and ensuring the overall stability ...
Balance of payments reflects trade balance
The balance of payments is a crucial indicator of a country's economic health, as it provides a comprehensive overview of all i...
Rational decisions not always made in markets
The assumption that all agents in the market make rational decisions is a fundamental pillar of classical economic theory. Acco...
Market timing is difficult and often unsuccessful
Timing the market is a fool's errand, plain and simple. Many people believe they possess the clairvoyance required to predict w...