Question

What are monetary variables?

Answer 1

Monetary variables are macroeconomic variables

Monetary variables are those which can be controlled with the help of monetary policies by using different instruments.

Monetary policy refers to the credit control measures adopted by the central bank of a country. It is a powerful tool to regulate monetary variables which includes inflation and unemployment and to attain equitable growth rate in an economy. This is possible by an appropriate growth rate in the supply of money. Monetary policies regulate monetary variables by using different tools. This includes purchase and sale of government securities, adjustment of interest rates and changing the amount of cash circulating in the economy. By changing the supply of money the authorities can also determine the exchange rate in an economy.