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SEMESTER FALL 2015 MONEY & BANKING (MGT411) ASSIGNMENT NO.02 DUE DATE: 8TH FEBRUARY 2016

SEMESTER FALL 2015
MONEY & BANKING (MGT411)
ASSIGNMENT NO.02
DUE DATE: 8TH FEBRUARY 2016 MARKS: 10
Learning Objectives:
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
Background:
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.
Questions:
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
Assets Liabilities
Government sec. Reserves
Foreign exchange res.
(Securities/ Currencies)
Government’s
account
Discount Loans Currency
Banking System’s Balance sheet
Assets Liabilities
Reserves Discount Loans
Government sec. Long term Loans
Foreign exchange res.
(Securities/ Currencies)

3. How the effectiveness of these tools can be limited by the actions of
commercial banks or general public?
IMPORTANT:
24 hours extra / grace period after the due date is usually available to overcome uploading
difficulties. This extra time should only be used to meet the emergencies and above mentioned
due dates should always be treated as final to avoid any inconvenience.
OTHER INSTRUCTIONS:
DEADLINE:
• Make sure to upload the solution file before the due date on VULMS.
• Any submission made via email after the due date will not be accepted.
FORMATTING GUIDELINES:
• Use the font style “Times New Roman” or “Arial” and font size “12”.
• It is advised to compose your document in MS-Word format.
• You may also compose your assignment in Open Office format.
• Use black and blue font colors only.
REFERENCING GUIDELINES:
• Use APA style for referencing and citation. For guidance search “APA reference style” in
Google and read various website containing information for better understanding or visit
http://linguistics.byu.edu/faculty/henrichsenl/apa/APA01.html
RULES FOR MARKING
Please note that your assignment will not be accepted, if:
• It is submitted after the due date.
• The file you uploaded does not open or is corrupt.
• It is in any format other than MS-Word or Open Office; e.g. Excel, PowerPoint, PDF
etc.
Note related to load shedding: Please be proactive
Dear students!
As you know that Post Mid‐Term semester activities have been started and load
shedding problem is also prevailing in our country now a days. Keeping in view
the fact, you all are advised to post your activities as early as possible without
waiting for the due date. For your convenience; activity schedule has already
been uploaded on VULMS for the current semester, therefore no excuse will be
entertained after due date of assignments, quizzes or GDBs.


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Replies to This Discussion

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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