Get premium membership and access questions with answers, video lessons as well as revision papers.
Major Limitations of Monetary Policy in less Developed Countries
Large Non-monetized Sector:
There is a large non-monetized sector which hinders the success of monetary policy in such countries
Undeveloped Money and Capital Markets:
The money and capital markets are undeveloped. These markets lack in bills, stocks and shares which limit the success of monetary policy.
High Liquidity:
The majority of commercial banks possess high liquidity so that they are not influenced by the credit policy of the central bank. This also makes monetary policy less effective.
Small Bank Money:
Monetary policy is also not successful in such countries because bank money comprises a small proportion of the total money supply in the country.
Money not deposited with Banks:
The well-to-do people do not deposit money with banks but use it in buying jewellery, gold, real estate, in speculation, in conspicuous consumption and many others. Such activities encourage inflationary pressures because they lie outside the control of the monetary authority.
steve williams answered the question on January 23, 2018 at 11:41
- How does liquidity trap occur?(Solved)
How does liquidity trap occur?
Date posted: January 23, 2018. Answers (1)
- Explain the phenomenon of liquidity trap(Solved)
Explain the phenomenon of liquidity trap.
Date posted: January 23, 2018. Answers (1)
- Recognize the impact of monetary policy on aggregate demand(Solved)
Recognize the impact of monetary policy on aggregate demand
Date posted: January 23, 2018. Answers (1)
- Justify expansionary and contractionary monetary policy.(Solved)
Justify expansionary and contractionary monetary policy.
Date posted: January 23, 2018. Answers (1)
- Explain factors that prevent the money multiplier from working empirically as it does theoretically(Solved)
Explain factors that prevent the money multiplier from working empirically as it does theoretically
Date posted: January 23, 2018. Answers (1)
- Explain how the money multiplier works in theory(Solved)
Explain how the money multiplier works in theory
Date posted: January 23, 2018. Answers (1)
- Use the concept of market equilibrium to explain changes in the interest rate and money supply(Solved)
Use the concept of market equilibrium to explain changes in the interest rate and money supply
Date posted: January 23, 2018. Answers (1)
- Explain factors that cause shifts in the money demand curve(Solved)
Explain factors that cause shifts in the money demand curve
Date posted: January 23, 2018. Answers (1)
- What are the factors that affects the demand of a product?(Solved)
What are the factors that affects the demand of a product?
Date posted: January 23, 2018. Answers (1)
- What is money multiplier?(Solved)
What is money multiplier?
Date posted: January 23, 2018. Answers (1)
- Factors to consider on making a decision on how to produce(Solved)
Factors to consider on making a decision on how to produce.
Date posted: January 22, 2018. Answers (1)
- Analyze the key political and economic governance challenges in Africa(Solved)
Analyze the key political and economic governance challenges in Africa.
Date posted: January 20, 2018. Answers (1)
- (a)Using well labelled diagrams,distinguish between demand and supply (b) state the law of demand and state exceptions to this law(c) Explain five constraints to...(Solved)
(a)Using well labelled diagrams,distinguish between demand and supply (b) state the law of demand and state exceptions to this law
Date posted: January 10, 2018. Answers (1)
- Give reasons for the regulations in the transport industry(Solved)
Give reasons for the regulations in the transport industry.
Date posted: December 18, 2017. Answers (1)
- Explain the nature of indifference curves for all goods(Solved)
Explain the nature of indifference curves for all goods
Date posted: December 17, 2017. Answers (1)
- Discuss the decolonization process in Kenya(Solved)
Discuss the decolonization process in Kenya.
Date posted: December 14, 2017. Answers (1)
- Human resource management is useless and shouldn't be taught to student at university. Discuss(Solved)
Human resource management is useless and shouldn't be taught to student at university. Discuss.
Date posted: December 7, 2017. Answers (1)
- State and explain the economic ideas of Hebrews(Solved)
State and explain the economic ideas of Hebrews.
Date posted: December 6, 2017. Answers (1)
- Using the mercantilism theory on protectionism explain how the kenyan government can protect its local industries(Solved)
Using the mercantilism theory on protectionism explain how the kenyan government can protect its local industries
Date posted: December 6, 2017. Answers (1)
- Describe the following types of economic markets using clear diagrams. (1) Perfect competition (2) Monopoly (3) Monopolistic competition(Solved)
Describe the following types of economic markets using clear diagrams. (1) Perfect competition (2) Monopoly (3) Monopolistic competition
Date posted: December 2, 2017.