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urgent econmomics question

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  • 20-06-2005 2:06pm
    #1
    Isabella
    Closed Accounts Posts: 23 ✭


    How can the central bank control the level of purchasing power in the Irish economy?Please reply asap.


Comments

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    #2
    *marie*
    Registered Users Posts: 332 ✭✭*marie*


    Is it something to do with the availability of loans or setting high interest rates or something? Just a complete guess sorry!


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    #3
    :Keith:
    Registered Users Posts: 418 ✭✭:Keith:


    The Central Bank controls the Monetary Policy which includes policy on rates of interest, the money supply and the availability of credit.


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    #4
    shoutman
    Registered Users Posts: 6,924 ✭✭✭shoutman


    To control purchasing power they use monitary policys
    ie. Adjust availability or credit, money supply, value of currency and interest rates.

    For example to control purchasing power the central bank will increase interest rates as this will act as an incentive for people to save

    They may reduce availabliltiy of credit so therefor people cant take out loans and spend

    They may decrease money supply or in an extreme circumstance revalue the currency.

    Hope that helped


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    #5
    the smiley one
    Closed Accounts Posts: 362 ✭✭the smiley one


    em......guys, all the monetary policy is now in the hands of the ECB - the central bank has little or no power over any monetary policies of this state (that question must be from an old past paper)...The central bank only has few functions ie.

    Price Stability
    Implement policies of the ECB
    Economic Research
    Mint coins and print notes
    Government and bankers bank
    Provide consumers with info regarding EU monetary policy


    THE CENTRAL BANK DOES NOT CONTROL OUR INTEREST RATES!!

    If you take one thing into the exam on wed, let it be that! :p

    :)


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