Define accommodating monetary policy

18-Feb-2018 12:16

define accommodating monetary policy-14

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They are meant to regulate the overall level of credit in the economy through commercial banks.The selective credit controls aim at controlling specific types of credit.

One of the most important objectives of monetary policy in recent years has been the rapid economic growth of an economy.

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Johnson defines monetary policy “as policy employing central bank’s control of the supply of money as an instrument for achieving the objectives of general economic policy.” G. Shaw defines it as “any conscious action undertaken by the monetary authorities to change the quantity, availability or cost of money.” The following are the principal objectives of monetary policy: Full employment has been ranked among the foremost objectives of monetary policy.

The reserves of commercial banks are reduced and they are not in a position to lend more to the business community.

Further investment is discouraged and the rise in prices is checked. Investment, output, employment, income and demand rise and fall in price is checked.

They affect the level of aggregate demand through the supply of money, cost of money and availability of credit.

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