This website uses cookies to ensure you have the best experience. Learn more

The Impact Of The Central Bank And Long Run Economic Growth On The Economy

1129 words - 5 pages

Introduction
To what extent is the central bank responsible for stabilizing the economy? Is LREC really vital to economic growth? In this assignment I will look deeper into these questions. This is important because economic stability depends on it, and without giving this topic thought thousands of households could be facing another looming recession.

In this essay I will evaluate the three questions given with regards to the central bank and LREC. The central bank is a country’s main bank, which provides banking services for the smaller commercial banks, and also the government.

Google define, states “a national bank that provides financial and banking services for its country's government and commercial banking system, as well as implementing the government's monetary policy and issuing currency.”

An economy is a system of exchange or trade. The theory of an economy is used to manage its resources, e.g. monetary, etc.

The Central Bank in any modern economy is not just a lender of last resort, but also has the critical role of stabilizing the economy. Explain why this is so and how it carries out this role using the policy instruments it has in its control.
One of the duties of a Central Bank is to be a Lender of Last resort. A lender of last resort is to is an entity that offers financial help to another that is experiencing financial difficulties.

An example of a Lender of Last Resort in the UK is the Bank of England. On 14 September 2007 the BoE was asked by Northern Rock for a bailout as they were experiencing financial difficulty, due to the recession. Subsequently northern rock was nationalised, which means it was brought into state ownership. However being a lender of last resort isn’t the only factor that the central bank plays in stabilising an economy.

The central bank has a list of duties that it may carry out. Main duties of the central bank include; creating monetary policy, providing financial services to the government, public and other official institutions, and also the central bank may be responsible for maintaining the stability of the economy by regulating the financial system.

The Central Bank may regulate the financial system by setting interest rates, managing the countries cold reserves, regulating the banking industry, changing interest, which will have a ripple effect on both inflation and also the countries exchange rate, controlling the countries money supply.
Monetary Policy
The Central bank of an economy may use monetary policy to help support the economy. They may use monetary policy to influence the money supple, the exchange rates of a country, and also they may use monetary policy to set the rate of interest that is offered by the central bank.

Controlling the Countries Money Supply
The Bank of Japan is the central bank of Japan. In the bank of Japan Toshihiko Fukui is the governor. On January 22, 2014 they had a recent meeting regarding monetary policy. At the meeting the Bank of Japan decided,...

Find Another Essay On The Impact of the Central Bank and Long run Economic Growth on the Economy

The Impact of China's Modern Foreign Policies on Economic Growth

1113 words - 4 pages The Impact of China's Modern Foreign Policies on Economic Growth Recent Chinese economic policies have shot the country into the world economy at full speed. As testimony of this, China's gross domestic product has risen to seventh in the world, and its economy is growing at over nine percent per year (econ-gen 1). Starting in 1979, the Chinese have implemented numerous economic and political tactics to open the Chinese marketplace to

The impact of early presidential foreign and economic policies on the growth of the nation

524 words - 2 pages Monroe went into his presidency, it was during the Era of Good Feelings. All the good came to an end when the economic depression brought on by the Panic of 1819 hit the same year during his administration.The charter for the Bank of United States ran out and the economy suffered. Congress passed a protective tariff because of Britain's plan to put Americans out of business. The tariff greatly raised taxes on imports. Henry Clay wanted to promote

The extent to which a Central Bank should have both goal and instrument independence and examine the possible implication of this on achievement of the macro-economic objectives

2118 words - 8 pages , using their influence over the money supply and interest rates to implement macroeconomic policies.The argument for a Central Bank independent of any government intervention is one that states Central Banks should be able to concentrate on the long term needs of an economy whereas political intervention may be guided by the short term needs of a government. Central Bank independence can be divided into two categories; Goal and instrument

Brazil’s Bolsa Familia: Its Impact on Inequality & Poverty in the Long-Run

2468 words - 10 pages percent of the total Brazilian population living on welfare (Soares 2012) –even more uncovered by the program– and no exit pathway for the beneficiaries or any job creation strategy linked to the program, it is highly unsustainable in the long-run. For real poverty be slashed and for the growth of the economy, continual extension of ‘safety net’ from its present 26 percent of the total population is not the best way to go. Most developed nations in

Brazil’s Bolsa Familia: Its Impact on Inequality & Poverty in the Long-Run

2546 words - 11 pages the program (in the short-term) have been successful in achieving two of its main goals –reducing poverty and equality– the ability of the program to sustain this positive impact in the near future (long-term) is doubtful without proper reform by the government. This paper will explore the long-term effect of Bolsa Familia on poverty and inequality reduction in Brazil, and I will argue that without proper reform of the program and further

A Comprehensive Examination of the Turkish Economy with Recommendations and Rationale for Economic Growth

2127 words - 9 pages have threatened the on-going process of democratization. Strained relations with the European Union (EU) over Turkey’s treatment of the Kurds and Greek Cypriots have threatened to derail a decade’s long pursuit of membership in the EU. These challenges have necessitated social, cultural, and economic reforms. To better understand the economic challenges Turkey currently faces it is important to first understand the Ottoman influence that paved

How did economic, geographic, and social factors encourage the growth of slavery as an important part of the economy of the Southern colonies between 1607-1775?

581 words - 2 pages and depended on their labor over the vast land. If there were no African slaves, then there would be no labor and therefore the land that would produce the cash crops would be gone and the economy of the south would fail.The economic section of the south depended on cash crops which were the paramount cultivation. The reason for having cash crops was because of the geographical location. The cash crops made Jamestown survive though selling the

Corruption and its Impact on Economic Growth and Development

10433 words - 42 pages the economy is overshadowed by its debilitating influence on Growth. An increasing population represents increased pressue on existing resources Which therefore tend to be overxploited and lose their long run growth potential. One Reason why the negative impact of population prevails is that most of the countries in out Model are nearing the end of their development process and hence are less likely to feel The marginal benefits of a more

Impact of Foreign Remittances on Economic Growth and Poverty Reduction in Pakistan

2476 words - 10 pages -December FY13), State Bank of Pakistan statistics stated. OBJECTIVE OF THE STUDY: • To analyze the impact of remittances on poverty and economic growth. • To recommend a policy to improve for economic growth through foreign remittances. • To recommend a policy to eliminate poverty through foreign remittances. HYPOTHESIS: Hypothesis 1: Ho: There is no impact of foreign remittances on poverty reduction. H1: There is impact

Additional factors which might be considered when examining the impact of Foreign Direct Investment on economic growth. Using Brazil as a case study

3224 words - 13 pages Direct Investment good for the poor? A review and stocktake.' Development in Practice, Vol. 15, No 3/4, 269-285.Wang, C, Liu, X and Wei, Y (2004) 'Impact of Openness on Economic Growth in Different Country Groups', World Economy, 27(4), 567-585.Author Unknown. 'Privatisation in Brazil'. Brazilian Development Bank- power point presentation. Available http://www.bndes.gov.br/english/studies/priv_brazil.pdf Accessed; 10 April 2009

Economic Impact Analysis on a High-Speed Railway System for Central Florida

3696 words - 15 pages regions. In this case, as economic development is regionally oriented, impacts outside the region are not counted, and are referred to as leakages. The following calculations are based on the assumption that the initial expenditure by the HSR is $200M, with a marginal propensity to consume (MPC) of 44%. The initial infusion of spending of $200M in Miami, Orlando, and Tampa creates a direct economic impact of $200M to the local economy. Of the

Similar Essays

The Impact Of The Central Bank And Long Run Economic Growth On The Economy

2173 words - 9 pages for a government to recognise that changes in revenue and expenditure can have an alternative impact on the government revenue & budget, however it may have different effects on economic growth in the long run. This shows true in the example of japan, whilst the £3.4bn stimulus package cost the government greatly it helped to boost japan out of a recession. By doing this, the Japanese government were ignoring the short-term growth of the economy

The Role Of The Central Bank In Stabilizing The Economy

2650 words - 11 pages ) Evidence of China’s Long Run Economic Growth The uses of supply side policies of China over past few decades help China to become the third biggest economy in the world according to the date from Trading Economics. Additionally, according to the World Bank, the GDP of China in 1980 was less than 1000 billion of U.S. dollars and in 2013 the GDP of China in raised significantly to 8230 billion of U.S dollars. Saving Rate Some economists say that

He Role Of Economic Geography In Economic Development And The Impact Of Ict On Economic Growth

2233 words - 9 pages countries are armed with good communications. On the contrary, some writers believe that geography still matters a great deal for economic interaction and for the spatial distribution of income.To discuss, I will concentrate on the role of economic geography in economic development and the impact of ICT on economic growth. From the existing inequality of economic development, we can see distance still matters in terms of economic transactions and

The Impact Of Fiscal Deficit On Economic Growth

1377 words - 6 pages Objectives The main objective of the study is to find out the impact of fiscal deficit on economic growth Secondary objectives are: - To find out the trend in Fiscal deficit and Economic growth - To find out the relationship between Fiscal deficit and Economic growth. - To find out the mean difference between the levels of Economic growth across the time period - To find out the mean difference between the levels of Fiscal deficits across the