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What is monetary policy? Who implements monetary policy in the U.S. economy? What are the two...

What is monetary policy? Who implements monetary policy in the U.S. economy? What are the two general types of monetary policy and when are they used? Identify and describe 2 tools that are used to implement monetary policy in the United States. Which monetary policy tool do you think is the most effective? Why? be clear the length of the essay is short and half a page of A4 double space in the world document

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Answer #1

Monetary policies are those policies which affects the money market in the economy. They are used to alter the output in the economy for stabilization of the economy.

In the united states federal reserve bank is the nodal agency for the implementation of monetary policy.

The tools are monetary expansion and monetary contraction. The first one expands the output and the later decreases the output. The tool is effective depending on the state of the economy. If the economy is in recession we need to expand the output and vice versa.

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