Monetary Policy in the US Assignment Example | Topics and Well Written Essays - 1000 words

Monetary Policy in the US - Assignment Example In order to overcome this problem, it is recommended that the policy implementation shall be incremental in nature with built in mechanisms to set threshold levels to trigger automatic responses where policy do not seem to deliver the desired monetary policy outcomes. Open market operations is one of the most frequently used tools that is being exercised by any central bank including FED. Open market operations basically involve the buying and selling of securities in open market in order to achieve the different monetary policy outcomes. Open Market Operations tend to provide an opportunity to FED to affect the banking system in following manner: 1. Affecting interest rates: through open market operations, FED basically mop out or in the liquidity within the banking system. By buying the securities, FED basically increase the supply of loanable funds thus interest rates tend to go down for short term period whereas by selling the securities, the liquidity is decreased which than increase the interest rates. 2. Controlling the volume of Credit: Through open market operations, FED basically increase or decrease the volume of credit as it either suck in the excess liquidity from the market or pump in new funds into the system. Through both methods, the overall extent of loanable funds can be increased or decreased in order to achieve the monetary policy objectives of the firm. 3. Open market operations also tend to affect the bank deposits because by floating securities in the market, FED basically take out funds from the banks which indirectly affect the deposits of the banks. Banks are required to keep a certain percentage of their funds as reserve with the FED in order to meet the uncertainties. FED can increase or decrease this percentage with the passage of time and according to the economic situation. Further banks can also borrow from the one window facility at the FED and the rate charged by FED on such funds is called discount rate.

Economic Tiger Feared Essay Example | Topics and Well Written Essays - 250 words

Economic Tiger Feared - Essay Example Dubai developed to become an economic tiger by exploiting geographical, economic, and human factors in her environment. With the geographical location of Dubai being primarily a desert, this factor was a drawback in comparison to thriving economies of the world. In a bid to match international business trends, this factor was treated as strength by economic developers in Dubai. A favorable environment for investment drew international investors into Dubai. In the human factor context, the population in the economy comprises of both locals and internationals, thus enjoying a broad labor force in economic pursuits (De Blij, 2009). European Industrial Revolution and the revolution being experienced in India relate to relate to that of Dubai in terms of resource base, adequate labor supply and investment practices, and relatively stable political environment. Economic tigers should be tamed as opposed to being feared. This is because their vibrant economies are beneficial to other less performing economies. For instance, the developing economies have benefited from massive projects that are financed by tiger economies. On the same note, tiger economies can provide information and guidance on economic growth and development pursuits by sharing their strategies and policies with economies that have the potential to handle them. Other global powers that deem it necessary to tame tiger economies should engage in economic collaborations, engaging in practices that result in measures and policies that regulate rapid rates of economic growth and development to a point that outperforms many other economies around the