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Q: Currently, what indictors are evident that there is too much or too little money within the economy? How is monetary policy aiming to adjust this?
A: Inflation, fiscal, and monetary policies are good indications. If inflation is high, the money supply in circulating with greater injections than leakages. [ Government policies of interest rates and taxation (monetary and fiscal policy) are good indications of attempted government intervention to control the amount of money available on the market/ floating. ]
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User: Currently, what indictors are evident that there is too much or too little money within the economy? How is monetary policy aiming to adjust this?

Weegy: Inflation, fiscal, and monetary policies are good indications. If inflation is high, the money supply in circulating with greater injections than leakages. [ Government policies of interest rates and taxation (monetary and fiscal policy) are good indications of attempted government intervention to control the amount of money available on the market/ floating. ]



User: How does monetary policy aim to avoid inflation?

Weegy: Monetary policy is the control of interest rates. [ The market psychology states that high interest rates will encourage savings rather than spending as one can earn more by depositing money in the bank and it is more expensive to take out loans in comparison to low interest rates. When inflation is high, interest rates will be raised to curb consumption. Inflation is usually the result of aggregate demand surpassing aggregate supply. With the limited amount of resources available, the supply for all goods and services are limited. When AD supasses AS, the price increases rapidly, which leads to high inflation. High interest rates discourage spending as taking out loans are more costly. This will lower the aggregate demand and eventually return the AD and AS to the equilibrium point or the comfort zone. ]



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Asked 6/27/2012 8:48:04 AM
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