AN EVALUATION OF OPEN MARKET OPERATION AS AN INSTRUMENT OF MONETARY POLICY IN NIGERIA. A RESEARCH PROJECT MATERIAL ON ECONOMICS
ABSTRACT
Generally, both fiscal and monetary policies seek at achieving relative macroeconomic stability. Based on countries’ experience on the role of monetary policy in controlling economics instability, this study examines the efficacy of monetary policy in controlling inflation rate and exchange rate instability. The analysis performed is based on a rational expectation framework that incorporates the fiscal role of exchange rate.
In this research work, the researcher is focusing on monetary policy and micro economic instability in Nigeria. The researcher will consider in chapter one the introduction of the study which will in turn considers the following topics: The background of the study, the statement of research problem, the objective of the study, significance of the study, the hypothesis and the structure of the work.
Chapter two focuses on the literature review; this chapter is where the researcher extracts materials from various books, magazines, newspapers and internet resources. In chapter three, the researcher deals on research methodology while chapter four is data analysis and interpretation. The finding, summary and conclusion are in chapter five.
CHAPTER ONE
1.0 INTRODUCTION
Monetary Policy refers to the mechanism for regulating the value, supper and cost of money at optimum levels that will ensure the attainment of desired national economic objective which include price stability, sustainable output and employment growth and external viability it encompasses actions designed to manage the growth of money supply during a period of his optional target. The monetary policy strategy for the achievement of these goals in any economy is often influenced by the stage of development of the economy and its financial infrastructure. when the monetary policy strategy is successful, the level of money becomes compatible with the rate of growth of output inflation and interest rate. Money at this level plays the role of an efficient lubricant of the wheel of economic activities in such a way that it will not constitute a nuisance to the extent that its supply will be too much or first- rate business intentions to that extent that its supply will not be enough .
There are two main monetary policy strategies, which are direct and indirect approach.