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The Role of Monetary Policy

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What is the role of monetary policy in influencing the relationship between production, employment, disposable income, and spending? Additionally, should the Federal Reserve Board of Governors remain independent--what is the strongest argument on either side?

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What is the role of monetary policy in influencing the relationship between production, employment, disposable income, and spending? Additionally, should the Federal Reserve Board of Governors remain independent--what is the strongest argument on either side?

As per tutor2u, "Monetary Policy involves changes in the base rate of interest to influence the rate of growth of aggregate demand, the money supply and ultimately price inflation." Thus, monetary policy is a policy which determines supply of money and cost of money.
Conventional monetary policy tools used by Fed to achieve the above objectives :
1) Controlling the Fedfunds rate
2) Open Market operations
3) Changing the Reserve requirements
4) Contractual clearing balances.
5) Discount window.
Key objectives of Conventional monetary policy are:
1) Maximize Employment
2) Moderate the long term interest ...

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Some economists believe that the Federal Reserve should follow strict rules for the conduct of monetary policy.

Some economists believe that the Federal Reserve should follow strict rules for the conduct of monetary policy. These rules would require the Fed to make adjustments to interest rates based on information that is fully available to the public, such as the current unemployment rate and the current inflation rate. What do you see as the pros and cons of such an approach?

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