Question

discuss any two monetary policy measures to control deficient demand.​

Answer 1

Answer:

Monetary policy helps to control the situations of excess and deficient demand through its following instruments:

(i) Quantitative Instruments:

These instruments aim to influence the total volume of credit in circulation.

•Major instruments or measures are:

(a) Bank Rate,

(b) Open Market Operation, and

(c) Legal reserve requirements.

(ii) Qualitative Instruments:

These instruments aim to regulate the direction of credit.

•Major qualitative instruments or measures are:

(a) Margin requirements,

(b) Moral suasion, and

(c) Selective Credit Controls.