monetary policy as a cyclical stabilisation instrument?

Question

with reference to specific examples: countries in crises for example and how they dealt with it by using monetary policy

Answer 1

No..its badly then Saddam Husein,Stalin and Hitler....i now one such country...Georgia,they have no economy,but have salary from USA government with weapons....but people dont have money in Georgia,their salary near 10$ in month....so police control them...they was arested in last year all members of liberal and democracy party before elaction....

Answer 2

Wow, I don't think the answerer above has a clue so I'll take a whack at it.

The Federal Reserve system in the US encountered a crisis in the 70s. There was high inflation and high unemployment. Paul Volcker raised the interest rates up super high. As far as a 21.5% Prime Rate. This "shock therapy" got inflation back under control, but almost stopped the US economy in its tracks. Once the interest rates settled back down, the economy got back to normal and the business cycle continued as before.

In fact, Alan Greenspan, who replaced Volcker as the Fed Chairman, was able to keep from raising interest rates all during the early and mid 1990s creating a situation of unprecedented growth. He saw the increase of productivity offset inflationary pressures such that he did not have to raise interest rates and cool the economy down.

Hope this helps
Good luck!

Answer 3

"Cyclical stabilisation" means efforts to dampen the lows and highs of the economic cycle. So to say, such monetary policy would make the troughs of depression shorter and less severe, and the booms of expansion at a less steep pace.