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MONETARY POLICY & FISCAL POLICY
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THE MATERIALS MONETARY POLICY understanding kind Aim instrument
FISCAL POLICY
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DEFINITION OF MONETARY POLICY
Definition Policies to regulate the amount of money circulating in the community with a variety of monetary instruments and measures taken by the monetary authorities (Central Bank or Bank Indonesia) to influence the money supply and the purchasing power of money.
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The types of Monetary Policy
a policy in order to increase the money supply. The policy is to tackle unemployment and improve the people's purchasing power (public demand) when the economy is in a recession or depression. Expansionary monetary policy is also called a loose monetary policies (easy money policy). Expansionary Monetary Policy (Monetary expansive policy): Contractionary monetary policy is a policy in order to reduce the amount of money in circulation. This policy is carried out when the economy experienced inflation. Contractionary monetary policy is also called the tight monetary policy (tight money policy). Contractionary monetary policy (contractive Monetary Policy)
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Monetary Policy Objectives
Maintaining Economic Stability Maintaining Price Stability Improving Employment Opportunities Fixing Position Trade Balance and Balance of Payments
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Monetary Policy Instruments
Open market operations is one of the central bank measures taken to reduce or increase the money supply. This policy is done by selling certificates of Bank Indonesia (SBI) or purchase securities in the capital market. Policy Open Market Operations (Open Market Operations) Discount is the government reduce or increase the money supply by changing the discount rate for commercial banks. If the central bank takes into account the money supply had exceeded requirements (symptoms of inflation), the central bank announced its decision to raise interest rates. By raising interest rates will stimulate the desire to save money. Discount Policy (Discount Policy) The central bank may make regulations for raising or lowering the cash reserve (cas ratio). Commercial banks, receiving money from customers in the form of demand deposits, savings deposits, time deposits, certificates of deposit, and other types of savings. There is a certain percentage of the money deposited customers who may not be lent. Cash Reserves Policy Still be given credit for commercial banks, but the gift must be strictly based on the requirements 5C, namely Character, Capability, Collateral, Capital, and the Condition of Economy. With tight credit policy, the money supply can be monitored. The usual policy measures taken when the economy is experiencing the symptoms of inflation. Tight Credit Policy The central bank can also affect the amount of money circulating in various announcements, speeches and circulars aimed at commercial banks and other financial actors. The contents of announcements, speeches and circulars can be either an invitation or a prohibition to hold or release the loan savings loan Encouragement Policy Moral (Moral suasion)
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Definition of Fiscal Policy
Fiscal policies are government policies in influencing expenditure and revenue with the aim of creating a high employment without inflation
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The types of Monetary Policy
- A policy in order to increase the money supply. - This policy is done to tackle unemployment and improve the people's purchasing power (public demand) when the economy is in a recession or depression Fiscal expansive policy: - A policy in order to reduce the amount of money in circulation - This policy is carried out when the economy experienced inflation Fiscal Contractive Policy
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Fiscal Policy Objectives
Increase the rate of investment. Improving employment opportunities. Encouraging investment socially optimal. improve stability finance
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Fiscal Policy Instruments
STATE REVENUE STATE EXPENDITURE APBN REGIONAL REVENUE REGIONAL EXPENDITURE APBD
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