Monetary policy is a process in which the monetary body of a country takes control of the money supply, keeping on watch matters of inflation rate and interest rate for price stability and building trust on currency. For the last 3-5 years monetary policy has been Contractionary which has caused deterioration of asset values.
Money supply is the sum of the monetary assets present in a given economy at a specific time. It has increased for the last 5-3 year's thus causing high prices and inflation in the economy.
Interest rate this is the rate at which borrowers pay back interest to the lenders. For the last 3-5 years it has gone high attracting high thus lowering the investments.
Question below
- Describe the impact of these monetary policies on the U.S. economy?