Answer to Question #192492 in Microeconomics for Narendra

Question

Monetary Policies in Pakistan since 1960-2020, related to unemployment issues, how these policies effected unemployment in Pakistan and how useful were these monetary policies in these 60 years. 1000 words explanation with related graphs and statistics.

Answer 1

The monetary policies include the control of the monetary policies which include the changes in the quantity of money supply in the economy. The money supply change would result in the change in the total money supply in the economy which would affect the country's output.

The money growth would result in the increase in the expansion of the real GDP. Thus, monetary policies would be one of the effective policies to recover a country from a recession.

The money supply in country P has been quite fluctuating during the time period 1960-2020 as the money supply has been more or less constant from 1960-2008 which result in the unemployment to be at a consistent level low varying from 0.9% to 1.1%. The money supply growth in country P from 2008 experienced a steady growth from 4,431.5 billion country P rupee to 22,572.9 billion currency P rupee. The money growth continuous increased from 2008- 2021 whereas on the other hand the unemployment also surprisingly increased from 0.95% in 2008 to above 2% in 2013 and further increasing to 4.85% in the current year 2021.

Thus, the increase in the money supply would result in the increase in the unemployment. Thus, the monetary policies were not capable to increase output and the monetary policies are not effective in increasing output in the 60 years.