discuss some of the options that can be used by kenyan government in dealing with the excess money in circulation
Answers
Answer:
Key Takeaways. Governments can use wage and price controls to fight inflation, but that can cause recession and job losses. Governments can also employ a contractionary monetary policy to fight inflation by reducing the money supply within an economy via decreased bond prices and increased interest rates
Explanation:
Answer:
The goal is to maintain the value of the Kenya shilling and to achieve stable pricing as shown by low and stable inflation.
Explanation:
The Central Bank of Kenya's primary objective is to formulate and carry out monetary policy with the intention of achieving and maintaining price level stability. The objective is to achieve stable pricing as evidenced by low and consistent inflation while preserving the value of the Kenyan shilling.
Central banks alter their monetary policy through altering the money supply. They frequently carry out this action by purchasing or dumping shares on the open market. Open market operations have an impact on short-term interest rates, which in turn has an impact on longer-term rates and the economy.
To reduce the amount of money in circulation, a government may use the following monetary policy tools: selling government securities via open market operations through the Central Bank. the bank rate is the increase in bank loan interest rates. Commercial banks' cash-to-liquidity ratios might be increased.
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