Impact of monetary policy on gross

This is the responsibility of the monetary authority which comprises the central bank and the federal government in Nigeria, the central bank exercises primary responsibilities for initiating, articulating, implementing and appraising such policies. The banks proposal are subject to ratification by the federal government.

Impact of monetary policy on gross

In determining the factors influencing money demandFriedman casts it in function is as follows. The controversies in monetary theory and policy have centered on what has come to be called the transmission mechanismthe channel by which money supply influences economic activity.

It may also be the case that the time lags inherent in the various channels of transmission differ. An important point worth stressing from the policy point of view, is the empirical fact that a close relationship is found to exist between money supply and nominal income in all countries.

It follows perhaps logically from this, that if production cannot adjust in the short run, due to whatever bottlenecks, monetary action is likely to cause changes in prices Dornbusch and Fischer As noted earlier, monetary policy refers to the combination of measures designed to regulate the value, supply a cost of money in an economy in consonance with the expected level of economic activity.

Impact of monetary policy on gross

One of the principal functions of the Central Bank of Nigeria CBN is to formulate and execute monetary policy to promote monetary stability and a sound financial system. The CBN carried out this responsibility on behalf of the federal government through a process outlined in the Central Bank of Nigeria decree 24, and the banks and other financial institution decree 25, as amended.

In formulating and executing monetary policy, the governor of the CBN is required to make proposal to the president of the Federal Republic of Nigeria who has the power to accept or amend such proposals. The CBN is also empowered by the two enabling laws, to direct the banks and other financial institutions to carry out certain duties in pursuit of the approved monetary policy.

Usually, the monetary policy to be pursued is detailed out in the form of guidelines are generally operated within a fiscal year but the elements could be amended in the course of those particular years. Penalties are normally prescribed for non- compliance with specific provisions in the guidelines.

The aims of monetary policy are basically to control inflation maintain a health balance of payments position in order to safeguard the external value of the national currency and promote adequate and sustainable level of economic growth and development. Monetary policy is art of the overall economic policy that regulates the level of money supply and credit in the economy in order to achieve some desired policy objective.

By monetary policy objectives, we mean the ultimate objectives of macroeconomic policy.

Monetary Policy

The maintenance of price stability; maintenance of balance of payment equilibrium; attainment of high rate of employment; accelerating the pace of economic growth and development; exchange rate stability and the maintenance of Price Stability.

In the modern economy, the price level tends to be sticky if not rigid in the downward direction, so that the problem of price level stability has essentially been that of avoiding inflation. Inflation erodes the purchasing power of economic agents and introduces uncertainty and other vices.

Impact of monetary policy on gross

Price stability is therefore, necessary not only to remove these vices but also to restore confidence and maintain international competitiveness. The Maintenance of Balance of Payments Equilibrium: For instance, monetary policy affects the interest rate and high interest rates attract capital inflows and hence influence the balance of payments.

Which this level of development and growth are attained depends upon the resource available to the country. The Central Bank in its monetary measures, aims at maintaining adequate level of foreign exchange rate consistent with the allocative efficiency.

This is an indirect or traditional approach of monetary control. They include the manipulation of: Attainment of High Rate of Employment In the real world situations, the level of employment that implies full employment is not obvious.

But it is not possible that all those seeking employment will be employment at one time. Even in the period of boom in a dynamic economy, some people will always be between jobs or seeking new employment. Thus, the monetary policy measures aim at attaining a high rate of employment that should proxy full employment.

In other words, it aims at maintaining a low and stable level of unemployment, Anyanwu Development may be measured by the level of income per heard, capital per head, savings per head, the percentage of unexploited resources amount of public goods, the extent to which the working class obtained education.

While economic growth may be said to concern itself with the effect of investment on raising potential income and hence causes changes in the living standard of the people.

The extent to which this level of development and growth are attained depends upon the resource available to the country.

In other words, the markets’ expectations about monetary policy tomorrow have a substantial impact on long-term interest rates today. Researchers have pointed out that the Fed could inform markets about future values of the funds rate in a number of ways. PROECT TOPIC: IMPACT OF MONETARY POLICIES ON NIGERIA COMMERCIAL BANK (A CASE STUDY OF ZENITH BANK P.L.C includes abstract and chapter one, complete project material availableReviews: 7. This study helps to evaluate the impact of monetary policy on the growth of emerging economy: Nigerian experience. The study affirmed a long-term existing relationship among real gross domestic product interest rate, inflation, money supply and exchange rate.

Open Market Operations Open market operation refer to the buying and selling of government and other approved securities by the Central Bank in the open market.

Increase in the bank deposit implies an increase in the money supply. Thus, if the Central Bank wants to reduce the volume of money in circulation because the economy is irking by inflation, it sells securities to be public for which the public pays by writing cheque favoring their deposit accounts.

In other words, it is the rate of interest the Central Bank charges the commercial banks on founds lent to them against collateral. The manipulation of the discount rate helps to control the volume of money in circulation.ABSTRACT— This article explores the impact of monetary policy on gross domestic product (GDP) of the state.

There is an immense effect of monetary policy on GDP of . Fiscal policy is the means by which a government adjusts its level of spending in order to monitor and influence a nation’s economy, specifically the Gross Domestic Product (GDP).

The monetary policy impacts the important facets of the economy, which include attempts to achieve stability/rise in gross domestic product (GDP) growth rate, maintain low rates of unemployment.

This study helps to evaluate the impact of monetary policy on the growth of emerging economy: Nigerian experience. The study affirmed a long-term existing relationship among real gross domestic product interest rate, inflation, money supply and exchange rate.

(A CASE STUDY OF ZENITH BANK P.L.C) ABSTRACT. The economic policies or interpretation of such policies has always left a key question unanswered, how much authorities do such policies allow the banks to use their powers to lend, to made remarkable impact in Reviews: 7.

Learn about the impact fiscal and monetary policy have on aggregate demand, and discover how the government influences economic growth.