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Monetary Policy - Essay Example

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Money supply is governed by the Monetary Policy. But before explaining the Monetary Policy, one needs to understand money and its real purpose. Realizing the value of money is just as simple as being thirsty and not even having a single drop of water to drink. How are we going to survive without water? How are we ever going to get what we want? The answer lies in the basic drop of water that may act even as a penny and help us get rid of our thirstiness. Hence, in our developed world of today, money is undoubtedly one of the necessities of life that is significant and very much required for our survival. For our endurance though it may be through food, clothes or keeping the status symbol, money is an obligation. The purpose of money is to make easy the exchange of values among community and between different people. In older days barter system was used which was the trading of things and services in a very limited and cumbersome method of exchange. But through this method are 2 buffalos worth a 1 acre of land? How are you going to have that 1 acre of land for 2 buffalos? It is clear that money is a source of wealth creation. Each human being desires for a good health, enough food and shelter though it may be in the form of a house, clothes, or even social security. All these things are considered the basic provisions of life. Therefore, money is the only source by which one can earn the necessities of life. ...
Further more, The Federal Reserve has tools to govern the money supply as

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Summary

Monetary Policy Countries all over the world are regulated by a government that consists of different departments that carries out various functions such as building infrastructure, providing benefits to its citizens, giving opportunities to the unemployed etc…
Author : andersongerda
Monetary Policy essay example
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