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Regulatory Policy

In addition to financial and monetary policies, a government influences the economy by regulatory policy, which intends to restrict the activities in the marketplace. Most governments have some ordinances comprising various areas, including Banking, security, and other commercial businesses.

Regulations are imposed ordinarily by a regulatory agency which is established or mandated to carry out the purpose of an enactment. It is also known as the regulatory requirement.

Rules ensuring that businesses offer safe products to consumers are part of a nation’s monetary policy.  

Further Explanation:  

Monetary policy includes actions of Federal Reserve on matters like price stability, employment and long-term interest rates.  The Monetary policy has a great impact on the short-term of the interest rate. It includes equities prices, the exchange rate of a currency. It also has other dimensions like the investment in a business, production process, spending in a household, employment. It measures inflation in the country. It controls the supply of money in the country. It is the authority of the central bank to identify the size and growth of the supply of money in the market. These powers are given to Federal Reserve of the country. They perform actions on short-term interest. Federal Reserve helps in the transfer of the funds. It is the responsibility of the Federal Reserve to look into the efficiency of the banking sector. There has also been a criticism of Federal Reserve regarding its accountability, regulation, market distortion. Banks can also invest in international market. There has been a currency war between China and USA. Auditing and transparency are very important for any governmental agencies.  

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Answer Details:

Grade: High School

Subject: Political Science

Keywords: Price stability, employment, equities prices, investment in a business, production process, spending in a household, employment, inflation, efficiency, accountability, currency war.

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