Short-term interest rates reached "the rock-bottom level of 1% of earlier this year," but "when the Labor Department reported on Friday that employment surged by 337,000 jobs in October, far faster than most forecasters had expected, market speculators immediately raised their bets that the Federal Reserve would not pause in its course of gradually raising interest rates," as it has done in the past. (Andrews, 2004) However, although the Fed's desire to raise interest rates and limit consumer spending might be keeping with its desire to stem inflation, it may meet with opposition from marketers who wish the holiday marketing season to show a substantial improvement from last year
Inflation remains low because of the seemingly unchanging rate of unemployment and income. In addition, the low inflation rate is associated with the slow economic activity during the winter months because of adverse weather conditions (Liu, 2014)
This is a monetary policy initiative that helps in managing interest rates and encourages consumers to buy products and services that they would not normally buy with higher interest rates. Controlling the quantity and management of cash supply contributes to lower interest rates, which lessens the cost of borrowing while encouraging consumer spending and investment (Pettinger, 2012)
Monopolies can invest the monopoly profits they accrue from their business activities in research and development. This can insulate them from possible collapse (Amadeo, 2012)
Had the monopoly succeeded there could still be poor quality video and audio and higher transmission costs. There would be no RCA Astro Electronics and Western Union the pioneers of satellite distribution technology (Frum, 2000)
The government is allowed to spend at a deficit at such times, given that it can recoup the money once the economy improves. Keynes believed "that a prosperous society in which everyone is employed was the surest way of maintaining the independence of thought and action he considered the guarantor of true democracy" (Koehn 2011)
.would only lead to another burst of inflation and another downturn" (Nasar 2011)
The exchange rate for the countries is determined and the foreign exchange transactions are then completed at a physical level. (Bordo, M
The number of jobs that a monetary policy generates (employment) and the rate of increase in output because of a monetary policy depends on the price stability, technology, people's priorty to save money and trends of working and risk taking over the period of time. (Cambazo-lu & Karaalp, 2012) In the long run price stability lleads toward efficient allocation of resources
Financial markets consist of financial intermediaries that play an important role in channeling the funds from Sufficient Fund Units (SFUs) to Deficit Fund Units (DFUs). (Driffill, J
Throughout the world, the central banks usually make long-term price stability their primary goal. (Gaspar & Abreu, 1999) Both inflation and deflation are economic phenomena that can have negative effects on the economy
Inflation can be defined as a continuous increase in the prices of goods and services over a long period of time, which can cause the value of the money to decline and can have an unpleasant effect on the purchasing power of the money as well. (Gerdesmeier, 2007) Deflation on the other hand is a constant decline in the prices of goods and services over a long period of time
(Monetary Policy in Developing Countries, 2011) There are four main strategies, namely inflation targeting, exchange rate fixing, currency board and dollarization, that the developing countries can use to achieve the macroeconomic or monetary policy goals. (Huang, & Wei, 2005) 3
It cannot be framed easily as the formulating of the monetary policy for the state is a massive responsibility for the central bank of that state because the composers of the monetary policy are very well aware of the fact that there little mistake can cost the state and its economic development a lot. (Labonte, 2006) Monetary policy can be defined as a set of policies that are related to the supply of money
And they may contribute towards overall economic growth of the country in the long run. (Macfarlane, 2012) 3
3) Unofficial Dollarization: it means that the dollar is not a legal tender but it is widely used in private transactions as a store of value and a medium of exchange. (Meyer, 2013) Unofficial dollarization protects the citizens of the country from the high rates of inflation and it also elevates in the rates of borrowing and investments in the country
The supply of money has the above discussed impact on the interest rates at least in the short run and the medium run. (Mishkin, 1983) Interest rates can have a direct impact on the investment and consumer expenditure
These functions are in the realm of the competent national authorities. (Eijffinger, 2001) in a study presented at the Royal economic Society's Annual Conference the question is asked as to why the ECB has "such a poor reputation for transparency, when money market dealers have no problem in understanding what is going on - and why the Bundesbank was regarded as a model of successful central banking when it revealed so little of its thinking? In recent years, we have seen an emerging consensus that central banks should be not just independent of governments, but also 'transparent' and open in their conduct of policy
Furthermore the ESCA shall act in line with the principle of an open market economy with free competition." (Gelain, nd) Gelain states that the ECB has been charged by the responsibility of the maintenance of the price stability, but at the same time it has to care about other objectives, like economic growth
The European Central Bank is stated to play a role relating to responsibility for ensuring financial stability in the majority of EU countries. (Goodhart and Schoenmaker, 1995) the work of Eijffinger (2001) entitled: "Evaluation of the Economic Situation in Europe - 2nd Quarter 2001 (May 2001) for the European Parliament: Should the European Central Bank Ben Entrusted with Banking Supervision in Europe?" states: "The ECB is not entrusted with any direct responsibility related to prudential supervision of credit institution and the stability of the financial system