THE RELATIONSHIP BETWEEN MONEY SUPPLY AND LEVEL OF NATIONAL INCOME IN NIGERIA. A RESEARCH PROJECT MATERIAL ON BANKING AND FINANCE
ABSTRACT
This research work is intended to evaluate the relationship between money supply and national income in Nigeria during the period over view. View about the important of money in the working of the economic varies greatly. In particular, the means by which money affects income and output and the extent of the changes in money supply affect the economy is the issue of such controversy.
Monetary policy deals with discretional control of the money supply by the monetary authorities in order to achieve desired economic good (of price stability, full employment equilibrium and/increased production output). The policy aims at achieving some specific objectives by influencing the quantity of money or the financial system liquidity.
Such objectives include the following to find out in quantitative terms, the actual relationship between money supply and national income in Nigeria during the year overview.
The broad aim of these specific objectives is to make appropriate policy recommendations.
From works consulted and data gathered the searcher found out that issues of monetary policy have tended to divided economist into monetarism and Keynesians. The researcher further discovered that there are expansionary and contra dictionary monetary measures, for controlling depression and inflation respectively.
Further, it was also observed that money supply was a determinant factor in economic activity in Nigeria. The research work was conducted using multiple regression and statistical of variance procedure.
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Views about the important of money in the working of the economy vary greatly. In particular, the means by which money affects income and output and the extent to which changes in money supply (that is money stock ) affect the economy are two issues that have given Nise to a major debate between two group of economists distinguished by their adherence to two conflicting bodies of economic theory called Keynesians and Monetarism.
The debate has been long and complicated and has progressed through several stages over the years. This debate is important implications for the effectiveness of monetary policy and the importance of monetary policy relative to fiscal policy, in affecting income, output, employment and the rate of inflation.
The relationship between the stock of money and the level of income and output is fundamental to the monetarism and Keynesians debate.
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