Trending and predicting movements of economic indicators Dissertation

Trending and predicting movements of economic indicators - Dissertation Example One financial instrument that is normally used by governments is the issuance of treasury bills or government bonds wherein the earning interest rates will generally be followed by the banks of that country. By using the interest rates that will define the treasury-bill holder’s earnings will slowly influence the financial market to adjust its interest rates. In the absence of other economic indicators, the treasury-bill interest rates will not only be adopted by the banks in their own financial transactions but it will also be used as the bench mark for the amount of money that will be available to borrowers. In theory, if the interest rates are low more people will borrow money from the banks. If the interest rates are high, the theory sustains that little to no borrower will loan money from the banks and most economic activity will be financed from in-house sources. Other instruments or means of conducting monetary policy includes making the government as the lender of last resort wherein the government will be the source of funds that will be available to borrowers normally a function provided by banks and other financial institutions. Another means of conducting monetary policy includes changing the reserve requirements in banks in order for them to operate. Another is where the government announces its intent to reduce or control inflation or by simply indicating the interest rates it wants for the money it intends to loan out. And last but not the least is moral suasions.... One financial instrument that is normally used by governments is the issuance of treasury bills or government bonds wherein the earning interest rates will generally be followed by the banks of that country. By using the interest rates that will define the treasury-bill holder’s earnings will slowly influence the financial market to adjust its interest rates. In the absence of other economic indicators the treasury-bill interest rates will not only be adopted by the banks in their own financial transactions but it will also be used as the bench mark for the amount of money that will be available to borrowers. In theory, if the interest rates are low more people will borrow money from the banks. If the interest rates are high the theory sustains that little no borrower will loan money from the banks and most economic activity will be financed from in-house sources. Other instruments or means of conducting monetary policy includes making the government as the lender of last reso rt wherein the government will be the source of funds that will be available to borrowers normally banks and other financial institutions. Another means of conducting monetary policy includes changing the reserve requirements in banks in order for them to operate. Another is where the government announces its intent to reduce or control inflation or by simply indicating the interest rates it wants for the money it intends to loan out. And last but not the least is moral suasions or influencing financial institutions about their operating onuses. This paper was primarily completed using secondary sources and some data made available by the professor. The support and anchor of this paper rests on the theories propounded in the literature review. Literature Review This research is