Tiếng anh chuyên ngành 1 unit 12 monetary policy

SummaryMonetary Policy Quantitative Tools of Monetary Policy Reserve requirement Discount rate Open market operations The central bank’s control over the supply of money Expansionary

UNIT 12: MONETARY POLICY

Welcome to unit 12

Monetary Policy

• Dự phòng

• Lãi suất chiết khấu

• /sɪˈkjʊərəti/

• /ˈpraɪməri ˈmɑːkɪt/

• /ˈæɡrɪɡət dɪˈmɑːnd/

• /rɪˈstrɪktɪv/

• /'æset/

Giảm bớt Khoản chi tiêu

Dự trữ bắt buộc Chứng khoán Thị trường sơ cấp

Tổng cầu

Hạn chế Tài sản

II Summary

Monetary

Policy

Quantitative Tools of Monetary Policy

Reserve requirement Discount rate

Open market operations The central

bank’s control over the supply

of money

Expansionary monetary policy Restrictive monetary policy

 Firstly, it talks about quantitative tools of monetary policy.

There are 3 tools of monetary policy:

1 Discount rate: it is the rate of interest the Fed

charge for those loans

2 Open market operations: it means the Fed’s buying

and selling Gov securities

 Secondly, the central bank’s control over the

supply of money There are two kinds of

monetary policy

• Expansionary MP:

o It may be used to increase money supply by

reducing reserve requirement, discount rate

and buying more bonds It will result in a

rightward shift of the aggregate demand

• Restrictive:

o it may be used to cool an overheating economy

by increasing reserve requirement, discount

rate and selling more bonds it will curtail

investment, consumption, and even Gov

expenditure

III Short Questions

• 1 What is Monetary Policy?

Monetary Policy is a government policy related to a nation’s money supply by each

country’s Central Bank.

2 How many tools of monetary policy?

There are 3 tools of monetary policy:

Reserve requirement

Discount rate

Open market operations.

• 3 What is called reserve requirement? Reserve requirement is the

percentage the Fed sets as the

minimum amount of reserves as bank must have.

4 What determines the amount banks hold as reserves?

It is the Fed's reserve

requirements.

5 What is the central role of the reserve requirements?

The reserve requirement play a

central role in how much money banks have to lend out.

6 What is the discount rate?

The discount rate is the interest rate that the Fed charges when it lend money to the bank.

7 What are open market operations?

It is the Fed’s buying and selling government security.

8 How can the Central Bank shift

Aggregate demand?

By making more or less money available, the Central Bank can shift aggregate demand.

9 What can the Central Bank do to reduce aggregate demand?

They can increase reserve

requirements, raise discount rate or sell

bonds.

IV LONG QUESTIONS

1 what are the quantitative tools of monetary policy?

The quantitative tools of monetary policy include reserve requirement, discount rate and open market operations.

By changing the reserve requirements, discount rate the Fed can increase or decrease the money supply.

• To contract the money supply, the Fed increases the

reserve requirement, thus banks have keep more reserves

so they have less money to lend out and vice versa

• To contract the money supply, the Fed increases the

discount rate An increase in the discount rate makes the loans more expensive for banks to borrow from the Fed and vice versa.

For day – to – day Fed operations, the Fed used a third tool: open market operations

To expand the money supply, the Fed buys bonds To

contract the money supply, the Fed sells bonds.

2 What is the difference between monetary policy and fiscal policy?

There are several differences here.

• Monetary policy controls a nation's money

supply which is supervised by each country's Central Bank while fiscal policy is related to government's revenue and spending which is

in the hand of Ministry of Finance.

• 3 main tools of monetary policy are reserve

requirements, Discount rate and open market operations On the other hand, fiscal policy

uses taxation and government spending as its

2 main tools.

3 What is the relationship between monetary

policy and fiscal policy?

They have an interdependent and

complement relationship since they are many

overlapping issues between the two fields.

For example, if Gov decide to institute

expansionary fiscal policy, they reduce taxes or increase their expenditure, so that a large

amount of money will be supplied and aggregate demand will rise consequently As a result, Gov have to use restrictive monetary policy to reduce the inflation rate.

4 What is the difference between expansionary monetary policy and restrictive monetary

policy?

There are some differences here.

• Expansionary monetary policy is used to

increase the amount of money supply,

whereas restrictive one is used to decrease it.

• Expansionary one can increase bank lending capacity while restrictive one will decrease it.

Thanks for your listening

!

  