Share
Explore BrainMass

Monetary Policy's effects on the economy

I am trying to write a paper on monetary policies and need some help understanding how expansionary and contractionary monetary policies impact the various components of U.S. economy.

For example the effects of monetary policy on consumers, households, businesses, GDP, unemployment, budget, and trade deficits.

Solution Preview

Monetary policies change the level of the money supply in a country. Expansionary monetary policy expands (increases) the supply of money, whereas contractionary monetary policy contracts (decreases) the supply of a country's currency. Monetary policy can be used to control inflation or improve the economy. Contractionary monetary policy has the effect of reducing inflation by reducing upward pressure on price levels. Expansionary monetary policy spurs economic growth lowering the interest rates, which lowers the cost of financing capital projects. So expansionary policy will also ...

Solution Summary

The effects of monetary policy on consumers, households, businesses, GDP, unemployment, budget, and trade deficits.

$2.19