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SEMESTER FALL 2015
MONEY & BANKING (MGT411)
DUE DATE: 8TH FEBRUARY 2016 MARKS: 10
The objective of this assignment is to enable the students to understand:
• Different monetary policy tools, their implementations and their effects
• How central bank uses monetary policy tools in controlling money supply
• Effects of monetary policy tools on central bank’s balance sheet and monetary base
• Limitations of Monetary policy tools
The primary objectives of central bank are to manage inflation, ensure trust in the
currency and maintain price stability. To achieve these objectives, Central bank uses
various monetary policy tools to set the cost and availability of money. Each tool has
a direct impact on monetary base, balance sheets of central bank and banking
system. Central bank is intended to increase money supply of Rs. 10 billion in order
to promote business activities and economic growth.
1. What are the available monetary policy tools and how each tool helps central
bank to increase money supply of Rs.10 billion?
2. Show the impact of above tools/ transactions in the given balance sheets of
central bank and banking system by indicating increase (+) or decrease (-) in
the specific affected accounts. How each affects monetary base?
Central Bank’s Balance sheet
Government sec. Reserves
Foreign exchange res.
Discount Loans Currency
Banking System’s Balance sheet
Reserves Discount Loans
Government sec. Long term Loans
Foreign exchange res.
3. How the effectiveness of these tools can be limited by the actions of
commercial banks or general public?
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The central bank has three monetary policy tools, or instruments:
1 The target federal funds rate,
2 The discount rate, and
3 The reserve requirement
plzzz discuss this assignment
so we need to mention only names of these tools? any one here .. please start the discussion .
i think all are hafiz no need to discus
no but have no idea
Somebody plz discuss this assignment....
any idea about Central Bank Balance sheet????
Please Discuss here about this assignment.Thanks
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