The high and volatile prices of crude oil and natural gas appear troublesome for future predictions (Greenspan, 2005).
Another uncertain factor affecting the economy is productivity, which is delineated in unit labor costs, or the hourly labor compensation to output per hour ratio. An increase in productivity over the last decade has favorably influenced the United States' economy, in that efficiency gains restrained inflation. The concern is however that this rapid growth in productivity cannot be maintained. This inherent uncertainty is substantiated by the fact that output per hour, that reached its peak in 2003, seems to be declining. This may result in recession trends, although the duration of the productivity decline is uncertain. A related concern is the sharp decline of output measured from the product side of national accounts, although output as measured from the income side has not slowed as drastically. It is not clear how serious this is for the determination of future recession trends, as more information is necessary to determine this (Greenspan, 2005).
There are several factors influencing current monetary policy. While the general economic trends have been favorable for much of 2005, there are also negative factors such as oil and gas prices, as well as the state of terrorism that have to be considered. Anti-globalization and protectionist initiatives could also pose a threat to the global economy. The flexibility...
Monetary Policy In the United States, the Federal Reserve system is charged with implementing monetary policy (Investopedia, 2013). Monetary policy is essentially any the output of any central bank that seeks to manage an economy by means of manipulating the supply of money in the economy (Investopedia, 2013). The Federal Reserve (2013) defines monetary policy as what it does to "influence the amount of money and credit in the U.S. economy."
Monetary Policy and the Federal Reserve The Federal Reserve ("the Fed") is responsible for formulating and implementing the nation's monetary policy. Monetary policy is government actions to increase or decrease the money supply and change banking requirements and interest rates in order to influence spending by altering banker's willingness to make loans. An expansionary monetary policy increases the money supply in an effort to cut the cost of borrowing, which encourages
Economy, Monetary Policy and Monopolies The benchmark interest rate currently stands at 0.25% compared to 0.2500 that was registered in January 2011 (Trading economics, 2012). Meanwhile, the annual inflation has remained unchanged at 1.7% in June 2012. Inflation rate, here, means a general rise in prices measured against a standard level of purchasing power. GDP deflator and CPI are the most common measures of inflation. CPI measures consumer prices where as
Monetary Policy Every economic activity in the United States is related to the policies that are decided by the monetary policies of the nation that are formulated. This involves all activities like purchase of houses, starting up of new business enterprises, and expansion of businesses, investments in new plants or machinery. It also affects our investment decisions like putting our investments in banks, bonds, or the stock market. It is also
" (ECB, 2007) Operational efficiency is held to be the most important of all the principles of operation for the ECB and can be defined as "the capacity of the operational framework to enable monetary policy decision to feed through as precisely and as fast as possible to short-term money market rates. These in turn, through the monetary policy transmission mechanism, affect the price level." (ECB, 2007) Equal treatment and harmonization
Monetary Policy Any change in the central back policy or the bank reserves, which is made to influence the interest rates and thus the investment, employment or production, is called the monetary policy. If the monetary authority wants to increase production, they need to increase the bank reserves. The bank then expands the money supply, which in turn reduces the interest rates. Monetary policy is one of the tools that a
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