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The Monetary Policy Committee is entrusted with the task of fixing the benchmark policy rate (repo rate) required to maintain inflation within the specified target level. As per the provisions of the RBI Act, three of the six Members of the Monetary Policy Committee will be from the RBI and the other three Members will be appointed by the ...
Alternatively, the effects of expansionary monetary policy can also be described as higher stock prices (again leading to more funds) lower the costs of capital (financing with stocks instead of bonds makes investment cheaper), and will rise both demand and aggregate output. In other words: ↑ M → ↑ stock price → ↓ c → ↑ I → ↑ Y.
Taking expansionary monetary policy as an example, there are several channels through which monetary policy affects income distribution. The first is the asset portfolio. [1] As far as expansionary monetary policy is concerned, cash, deposits, and other assets have no, or relatively stable, gain; and their purchasing power is more likely to be ...
To curtail Unemployment, we would use Expansionary monetary policy which would do the same as above. In order to cure the Current account deficit in the economy, we need to increase the exports by a devaluation , that would, in turn, help in increasing the employment by creating more jobs.
The composition of the current monetary policy committee is as follows: [1] Governor of the Reserve Bank of India – Chairperson, ex officio - Sanjay Malhotra; Deputy Governor of the Bank in charge of monetary policy – Michael Debrata Patra [6] Executive Director of the Bank in charge of monetary policy – Rajiv Ranjan [7]
Monetary policy is the outcome of a complex interaction between monetary institutions, central banker preferences and policy rules, and hence human decision-making plays an important role. [100] It is more and more recognized that the standard rational approach does not provide an optimal foundation for monetary policy actions.
An expansionary monetary policy resulting in an incipient outward shift of the LM curve would make capital flow out of the economy. The central bank under a fixed exchange rate system would have to instantaneously intervene by selling foreign money in exchange for domestic money to maintain the exchange rate.
The interest rate channel plays a key role in the transmission of monetary impulses to the real economy. The central bank of a major country is, in principle, able to trigger expansionary and restrictive effects in the real economy, by varying the federal funds rate and hence the short-term nominal interest rate.