Question

How does the current monetary policy in the economy impact a common regular person's personal finance situation?

Your answer can include the a regular consumer's decision to buy home, and other consumer goods, save , invest money etc

Answer 1

Current monetary policy in the economy shows or explains how the Federal Reserve is taking steps to bring the economy back to equilibrium.

A contractionary monetary policy implies money supply being contracted in the economy in order to control for inflation.

An expansionary monetary policy implies money supply being increased in the economy in order to correct recession.

A contractionary monetary policy when used, implies the government is reducing money supply and thus consumers have less income in hand. This means their purchasing decisions will be contracted or reduced and he will be able to buy fewer goods and services.

On the other hand, an expansionary monetary policy implies the government is increasing money supply, which translates into higher consumer income and thus consumers being able to purchase greater amount of goods and services.