THE EFFECTIVENESS OF FISCAL & MONETARY POLICIES IN CONTROLLING INFLATION

THE EFFECTIVENESS OF FISCAL & MONETARY POLICIES IN CONTROLLING INFLATION

ABSTRACT

The purpose of this project is to evaluate the Effect of Monetary and Fiscal Policies in checking the causes of Inflationary trends in the Economy.

Before the advent of fiscal and monetary policies, inflation has been regarded as a nation’s scourage, which tried to parlayed economic activities in the economy. this persistent inflationary increase in the country gave impetus for the launching of these two policies as a good weapon to check the negative tendencies of inflation.

This work however considers briefly some of the various instruments used in monetary and fiscal policies to curb this problems. It also examiners the extent of compliance of various income earner (fixed income earners and businessmen) and even the government towards these policies. The research work is divided into five sections. The introduction, the literature review, the research methodology, discussion of findings, summary, conclusion and recommendation. It is therefore, a comprehensive and balance supplement to augment the effort of previous writers in the field. It is valuable to readers and future writers.

TABLE OF CONTENTS

Title page                                                                         i

Approval page                                                                  ii

Dedication                                                                       iii

Acknowledgement                                                            iv

Abstract                                                                           v

Table of Contents                                                             vi

CHAPTER ONE

INTRODUCTION

• General Overview of the Study 1
• Statement of the Problems 3
• Objectives of the Study 4
• Significance of the Research 5
• Limitations of the Study 5
• Research Methodology 6
• Definition of Terms 7
• Scope of the Study 10

CHAPTER TWO

LITERATURE REVIEW

2.1   Definition of Inflation                                       12

2.2   Causes of Inflation in Nigeria                           13

2.3   Types of Inflation                                             16

2.4   Effect of Inflation                                             17

2.5   Measures Taken to Control Inflation                        19

2.6   Concepts of Monetary Policy                            20

2.7   Objectives of Monetary Policy                          22

2.8   Monetary Policy Control Measures                   24.

CHAPTER THREE

RESEARCH METHODOLOGY

• Research Design 28
• Samples Size/ Population 28
• Sources of Data                                 29
• Data Analysis Techniques 31

CHAPTER FOUR

PRESENTATION AND ANALYSIS OF DATA

• Data Presentation 33
• Data Analysis 34

CHAPTER FIVE

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

• Summary 44
• Conclusion 45
• Recommendation                 46

Bibliography                                                            48

CHAPTER ONE

• INTRODUCTION

1.1 GENERAL OVER VIEW OF THE STUDY

In general monetary policy refers to the combination of matures designed to regulate the value, supply and cost of money in all company, in consonance with the level of economic activity. And excess supply of money  which will result in an demanded for goods and services will cause rising price and / or a deterioration of the balance of payment position. On the other hand, an inadequate supply of money could in due stagnation in the economy and there by retained growth and development-

Consequently, the central bank or the central monetary authority must attempt to keep the money supply growing at an appropriate rate to ensure sustainable economic growth and to maintain internal and external stability.

The discretionary control of the money stock by the central monetary authority, thus, involves the expansion or contraction of money influencing interest rates to make money influencing interest rates o make money cheaper or more expensive depending on the prevailing economic conditions and the channeling of money to priority sectors.

In a nutshell, the aims of monetary policy are basically to control inflation, maintain a healthy balance of payments position for the country in  order to safeguard the external values of the national currency and  promote an adequate an sustainable level of economic growth and development. The techniques by which the monetary authority tries to achieve the above objectives can be classified normally its two categories, the direct or portfolio control approach and indirect or market intervention.

In another development fiscal policy has its own measures, which aid in checking the causes of inflation in the economy. Such as the use of fiscal policy as a means of increasing economic activities and the use of fiscal policy as means of reducing economic activities, however, the researcher expatiates more of monetary policy due to its direct relationship towards inflationary tred.

1.2 STATEMENT OF THE PROBLEM

Over the years various policy measure have been formulated and implemented to achieve macro economic performance of the economy. Specially, certain monetary instruments have been employed from time to time to achieve economic growth control inflation and money supply in the economy. The policy instruments appeared to be more direct in nature.

However, these policy measure have not recorded the desired impact therefore the people stems from non performance of these measure. In the course of the study the researcher shall try to examine the following the problems of monitoring and enforcing the desired targets. The problems of  harmonization of fiscal and monetary policies are there any possible constraints and prospect in the use of this policies in Nigeria.

1.3 OBJECTIVES OF THE STUDY

The general objectives of the study is to critically examine the instruments and effects of fiscal and monetary policies in controlling inflations.

This objectives can be broken into the following

• critically examine the instruments and effect of fiscal and ,monetary policies in Nigeria
• To evaluate monetary policy as an instruments for stabilization
• To examine the effectiveness of fiscal in checking inflation as well as increasing or reducing economic activities.

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