A PROPOSAL ON THE TOPIC: MONETARY POLICY AND INFLATION IN
NIGERIA
ECONOMY .
Monetary policy entails the government polices aimed at
changing the quantity of money or credit condition; for example, open market
operations or changes in required reserve rations etc. monetary policy involves changes in the
quantity of money held by the public. In
our Economy, there are two types of money most obriously. The Naira bills and coins which you have in
your pocket are money; you can use them to buy hunch or go to a movie. But many purchases are not paid with†pocket moneyâ€.
Payment by cheque is very common. Since balances in checking account are used
so commonly to make purchases, they are counted as part of the total quantity of money. Because of the importance of checking account
money, a study of money include an examinations of how the banking works.
The major idea behind monetary police can be put quite
simply. When people have more money in the form either of cash in their pocket or of balances in their checking
account, the tend to spend more.
Thus, by taking steps to increase the quantity of money,
the authorities can encourage spending.
But if people may to buy more than the limited available supply of goods, the result is inflation.
Inflation
therefore is defined as a high and persistent rise in price level inflation can
cause business mistake for good decisions, businesses need an accurate picture
of what is going on. When prices are
rising rapidly the picture became obscured and out of focus. Decision- makers cannot see clearly. (for example business accounting is done in
Naria terms). When then is rapid inflation,
some businesses accounting may report profits, when on a more accurate
calculation, they might actually be
suffering losses consequently, inflation can temporarily hide problems. Our economy is complex and it depends on a
continuous flow of accurate information.
Hence, the
sole aim of this project is to assess the impact of various monetary policies
in Nigeria
and their effect on inflationary trends.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF
THE STUDY:
the beginning of inflation in Nigeria can be said to be a direct
result of the polices of the country’s governments to stimulate a
fast rate of economic growth and development since 1951 when material
government was introduced. Inflationary
trend since independence show two distinctions pend in terms of digital
analysis.
However,
the issue of monetary policy came to be in existence in order to be also a solution to the problem of inflation in Nigeria. We said that “Monetary policy is all measures
adopted by monetary authorities to control the availability credit, total
money in circulation etc in order to
achieve some objectives which include; achieving of full employment,
controlling of inflation achieving of economic growth and development, exchange
rate stability.
Central bank however, can only achieve this objectives by applying the
monetary policy instruments such as bank rate, open market operation (OMO),
mural suation research rations etc.
Through, this monetary policy can be applied based on the
type of problem facing the economy. This
can be either expansionary or concretionary policy measure based don the
situation the country is facing.
So,
monetary policy serve as an avoid to the problem of inflation in the economy.
1.2 STATEMENT OF
THE PROBLEM
The problem of inflation in Nigeria has been tackled in so many
ways by the government of the country to put it to an end and government brought many adequate
measures to combat this problems.
Despite all these measures, we still experience inflation
in the country. The question now is, why do we still experience inflationary
condition in domestic prices= This involves avoiding wide gyrations of
prices which are highly upsetting to the
economy.
Attainment of a high rate of , or full employment since
there is always a certain amount of frictional unemployment.
Achievement of a high, rapid and sub-stainable economic
growth. This means maximum sustainable
high level of output, that is the most possible output with all resources
employment to the greater. Possible
extent, given the general social and organization structure of the society at
any given time.
Maintenance of balance of payments equilibrium: This
involves keeping international payments and receipts in equilibrium, that is,
avoiding fundamental or persistent position.
Exchange rate stability:
This involves avoiding wide
gyrations or swings (undue and unnecessary fluctuations) in the currency
exchange, rate. This is after all these
adequate measure adopted by the
government to step it.
More still, the issue of monetary policy has its
objectives as solution to the problem of inflation. The
central bank apply all measures to stop it, still very effort seem to be
fruitless the next question is, why have
all these measures failed in combating the problem of inflation.
1.3 PURPOSE/OBJECTIVES
OF THE STUDY
The objectives of my study are as follows;
1. Attainment
of high rate of, or full employment.
2. Achievement of a high rapid and sustainable economic growth
3. Maintenance of balance of payments equilibrium.
4. Exchange rate stability.
Maintenance of relative’s stability meant to help in
perfecting and promoting foreign trade.
1.4 SIGNIFICANCE OF THE STUDY:
However,
this research study will however assist the
economy to derive possible solution to the problem of inflation using monetary
policy measures as adopted by the monetary authorities.
Furthermore, the research ext-rays the
types of monetary policy measures which can be used to combat the problem of unstable economy and as a result will be a
kind of research materials to those whom it may concerning their field of
study.
Government
will benefit immensely on this research work a the research have put it down.
1.5 LIMITATION OF
THE STUDY:
This project covers the role of monetary policy and
inflation in the Nigerian economy – A general view of monetary policy and
inflation in the Nigerian economy is the foundation upon which the project is developed.
However,
studies of this nature are known to be face with a number of problems which are
peculiar to the Nigerian society such as financial constraints. I was not an exception to the problem.
Visiting the Central Bank of Nigerian and some other places for data collection
involved spending a lot of money or transport.
Further
more, the issue of office protocol’s, time limit secrecy inadequate research
materials, also were some start backs to the researcher in caring out this
research.
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