For this question, refer to the Bank of Ghanas Monetary Policy Committee Press Release of March 18,
Question:
For this question, refer to the Bank of Ghana’s Monetary Policy Committee Press Release of March 18, 2020.
a) In ordinary language, explain the meaning of monetary policy. What is the difference between monetary policy and fiscal policy?
b) Explain the difference between monetary loosening and monetary tightening.
c) According to the statement, the MPC reduced the monetary policy rate by 150 basis points. Does this constitute a monetary loosening or monetary tightening? Explain
d) When deciding whether to tighten or loosen monetary policy, central banks weigh the relative risks to price stability and growth. Mention two indicators that the MPC use to gauge the risk to inflation and two indicators the MPC use to gauge the risk to growth.
e) Based on the information in the Press Release, in the thinking of the MPC did the risk to growth outweighed the risk to inflation or vice versa? Refer to specific points from the press release to back up your argument.
f) Using the money market diagram, explain the effect of this policy measure on the real
interest rate and real money holdings.
College Algebra
ISBN: 978-0134697024
12th edition
Authors: Margaret L. Lial, John Hornsby, David I. Schneider, Callie Daniels