Abstract
The purpose of this paper is to analyze the active fiscal policy and prudent monetary policy issued by CPC Central Committee Political Bureau in 2011 Economic Work Conference, and their effect on 2011’s overall economic situation. Firstly, we elaborate the categories and roles of macroeconomic policy. Secondly, we analyze the meanings of active fiscal policy and prudent monetary policy. Lastly, we describe their effect from the perspectives of price stability, improving people’s livelihood and promoting sci-tech progress respectively.
Highlights
The purpose of this paper is to analyze the active fiscal policy and prudent monetary policy issued by CPC Central Committee Political Bureau in 2011 Economic Work Conference, and their effect on 2011’s overall economic situation
We analyze the meanings of active fiscal policy and prudent monetary policy
We describe their effect from the perspectives of price stability, improving people’s livelihood and promoting sci-tech progress respectively
Summary
Monetary policy refers to government agencies (usually the central bank) making policies on money supply growth rate to influence the macro-economic activities (Yuan, 2010). The website of People's Bank of China issues four main monetary policy tools, i.e. open market operations, cash reserve requirements, central bank loans and interest rate. Open market operations are main monetary policy tool of central bank’s throughput of currency, and regulating market liquidity, which helps the central banks and designated securities dealers for foreign exchange trading, so as to achieve monetary policy objectives. Cash Reserve refers to the extraction by financial institutions to ensure customer deposits and capital needs for the liquidation of funds. Through the adjustment of reserve ratio, the central bank controls the supply of credit funds of financial institutions, thereby indirect controlling the money supply. People's Bank of China, according to the needs of monetary policy, can timely apply interest rate instruments, interest rate level and interest rate structure adjustment, thereby affecting demand and supply of social capital to achieve the stated objectives of monetary policy. People's Bank of China, according to the needs of monetary policy, can timely apply interest rate instruments, interest rate level and interest rate structure adjustment, thereby affecting demand and supply of social capital to achieve the stated objectives of monetary policy. (Monetary Policy Department, the People's Bank of China, 2005)
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
