Bank (money supply) Essay Example | Topics and Well Written Essays - 2500 words

Bank (money supply) - Essay ExampleAny organisation has the power and righteousness to regulate the economy of a country and not only does it regulate the economy, it has a vital economic consumption to ensure that the economic condition remains unchangeable. It is the responsibility of the g overnment to ensure that all the aspects of economy moderate a stable level so that the country can grow and expand. Government regulates many things in an economy including puffiness, exports and imports, prices of many vital commodities, and many important economic aspects. For example Government of England has entrusted the job of ascertain the monetary policy, in the hands of Bank of England. Bank of England looks into many other big issues. One of the close important issues is that of ensuring monetary stability in the economy, which can be achieved through a combination of stable prices of goods and services across the economy coupled with a low inflation level and level of boldnes s of the investors in the currency of the country. The Bank comes out with the monetary policy in order to ensure a certain key accusatorys like, delivering price stability with a low inflation level coupled with an objective to support the Governments economic objectives of growth and employment. Price stability is taken care of, by the Governments usual inflation posterior of 2%. There is a contract to contemplate the crucial and critical role play by price stability in achieving the aforesaid economic stability, and in providing just the right conditions for a sustainable and longer living growth in output and employment. Chancellor of the Exchequer announces the Governments inflation target every year in the annual Budget statement. Though The 1998 Bank of England Act enables it to narrow down fire rates independently, however, The Bank does hold accountability to the parliament and the wider public, which can not be refrained from. The legislation provides the government t he power to instruct the bank on the interest rates issues for a limited period of fourth dimension during emergency, for the sake of national interests. (How Monetary Policy Works) A target of 2% does in no guidance mean that inflation will be held at this rate constantly. That would be neither possible nor in any way desirable. Interest rates would be changing all the times, causing unnecessary excitableness in the economy. Even then it would neither be possible nor feasible to keep inflation at any predetermined level, say 2% in each and every month continuously. Instead, the committee aims to set interest rates so that inflation can be brought back to target within a reasonable and imaginable span of time without creating undue instability and volatility in the economy. The government is alike entrusted with the job of regulating property and commodity prices. To have a look into this in detail, we may need to analyze the factors that are generally responsibly for a rise in property prices. Before purchase a house property, any buyers first job is to assess the price of the property depending on the location, as location as a non-economic factor plays the biggest role in determining property prices all over the