Monetary Policy Addressing Recession Research Assignment - 1925 Words

Monetary Policy: Addressing Recession Research Assignment (Essay Sample) Content: NameProfessorCourseDateMonetary Policy: Addressing RecessionIntroduction The economic development of any particular country reflects the well-being of its citizens. An economically stable country is able to give proper services and feed its people. In most cases, the Gross Domestic Product (GDP) is used to measure the state of the economy. GDP is also applicable when comparing the economic prowess of one country with another. It is the responsibility of any particular government to manipulate and control the growth of its economy. There are two major tools that are used in stimulating or slowing down economic growth in different countries. These are fiscal policies and monetary policies. The two are techniques initiated by the government in a bid to control inflation, unemployment or any other negativity that comes with inflation or a recession. This paper focuses primarily on monetary policy as a tool to pull an economy out of a recession and stimulate growth.Meaning of a Recession A recession refers to the period when an economy experiences a general fall in the GDP. This happens in two successive quarters of economic growth. There is a general fall in the industrial and trade activity in the affected country. A recession is mostly described with the conditions that it brings in a country (Miles 4). To begin with, the unemployment rates soar and industrial activity undergoes a persistent contraction. This means that industries have to lay off some of the workers as production falls. The result is that a significant percentage of the labor force would be jobless. This leads to reduced income since individuals become dependents on the working population. The demand for goods and services decrease to as a result. There is a general decrease in the standards of living for everyone (Kiyotaki, Nobuhiro, and Moore). Other characteristics of a recession include the reducing prices of assets; for instance, the prices of houses and land decrease signifi cantly. Also, government borrowing, both from the local and foreign sources, increases considerably. Still, due to decreased demand, firms perform a destocking exercise where the spare stock is sold out at throw away prices. Heavy discounting follows implying that the prices of all goods fall. Inflation is low during this phase of the business cycle (Kiyotaki, Nobuhiro, and Moore 8). Monetary Policy and Fiscal Policy The two terms can be used interchangeably to address recession. Fiscal policy refers to the deliberate actions by the government aimed at stimulating economic growth. Such actions involve the manipulation of taxes and government spending in a bid to reverse the situation. The end result is a stimulated growth. Lowering of taxes accompanied by increased government spending increases aggregate demand, which in turn stimulates growth. On the other hand, monetary policy involves the manipulation of money supply and interest rates especially through the central bank to contr ol inflation or a recession. Money supply in an economy can influence the direction in which the business cycle heads. Too much money circulating in the economy brings about a decreased value for the same. As such, the prices of goods and services soar to high levels, resulting in inflation. Still, too little money in the economy brings about increased demand for the commodity. This results in a situation where the value for money is high. The central bank is instrumental in the control of the supply of money in the market. There are various methods used by the central bank in carrying out this function:Bank rate: This refers to the rate of interest charged by various banks for any loans advanced to individuals and firms. The central bank has the powers and the mandate to control the interest rates charged. In cases of high money supply in the market, the central bank increases the interest charged by commercial banks. This is done indirectly by increasing its own interest rates it charges on other banks. As such, to remain in business and foster profits, commercial banks are forced to increase their interest rates. The result is that less and less people would be willing to acquire loans from banks. The cost of capital would be just too high. The money supply in the market consequently goes down to desired levels.In cases of low money supply in the market, the central bank drives the interest charged by banks downwards. As a result, the cost of capital lowers and more people are attracted to obtaining money from banks. The result would be increased money supply in the market. Such loans are mainly meant for investment purposes (Mahadeva, Lavan and Gabriel 14).Open market operations (OMO): In open market operations, the government takes to buying and selling of securities to either increase or reduce the supply of money in the market. It is the sole responsibility of the central bank to advice the government on the direction of the money supply, and the measur es to take. When the supply of money is high, the government sells its securities at attractive prices to the public. The result is that, as people and firms use cash to buy such securities, the amount of money available in the market goes down. In the opposite case where the supply of money in the economy is high, the government buys back its securities from the public. This way, they are converted into cash in the market and money supply increases to desired levels (Mahadeva, Lavan and Gabriel 17).Cash reserve ratio: The cash reserve ratio is the amount of money that is legally required of commercial banks to keep with the central bank. It is usually expressed as a percentage of the total deposits in each individual bank. This amount is subject to change based on the prevailing market conditions, and the central bank has the mandate to adjust it. Such adjustments are done to control the supply of money in the market. The main assumption of this form of control is that investment c apital is what determines money supply. The commercial banks are also required to maintain a given level of liquidity or cash in their vaults, an amount that cannot be lent out. When the supply of money is high, the central bank increases the amount required of commercial banks to keep in reserve. This way, the amount of cash available at the banks for lending is low. Some of those seeking loans are therefore turned away. The supply of money in the market falls.In the case where money supply is low, the central bank decreases the amount that commercial banks are meant to keep in reserve. More funds are therefore available for lending to the general public. As such, firms and individual have more access to investment funds and money supply in the market increases as a result (Mahadeva, Lavan and Gabriel 20).How Monetary Policy Brings Recession to an End The Keynesian theory put forward a situation where the economy will always experience highs and lows. There are four quarters that a re used to describe the business cycle. There are therefore four different phases that describe the economy, and all characterized by different extremes of economic change, either positive or negative. A recession mostly is initiated by efforts by the government to decrease the rate of economic growth. When the rate is too high, a period mainly referred to as a boom, the rate of inflation tends to be too high. This is because the economy is experiencing a lot of expansion, unemployment rates are low and income is high (Miles 6). There is therefore surplus cash available to households to spend on goods and services. The implication is that the aggregate demand is at its peak. In a bid to control the negative effects of a fast growing economy such as inflation, the government sets monetary policy into operation. The main aim is to balance the money supply and demand. There are two major techniques applied in monetary policy to reduce economic stimulation: increasing interest rates a nd controlling money reserves held by banks. This results in controlled flow of money into the market (Miles 8). Reduced money supply decreases the rate of new investments in the economy. This results in decreased job opportunities, and a general reduction in aggregate demand. The demand for money increases, interest rates go up and industrial activity contracts. The overall result is decreased industrial and trade activity, which leads to slowing down of industrial growth. If this continues beyond one quarter of the business cycle, the result is a recession. A recession is a period of declining economic growth. Sometimes, the economic growth can be too low to the point that it is mistaken for a recession. For instance, a 0.5% growth rate is too low to be noticed by people, and can often be described as a recession. A recession is usually the preceding phase as the country heads i...

Commenting Assignment Paper on the 360 Performance Review - 2200 Words

Commenting Assignment Paper on the 360 Performance Review (Essay Sample) Content: Performance reviews 360-degreesNameProfessorCourseDatePerformance reviews play a vital role in human resources management in that they provide employees with valuable information concerning their job performance and can affect the well-being of an organization. The significance of an effective routine review cannot be emphasized enough the overall routine of an organization. Performance reviews can posses profound cause on levels of worker motivation and fulfillment. The primary duties of a manager in any organization are to evaluate the performance of his staff. Performance reviews are complicated and often provoke a sense of angst for managers as well as employees, and excellent communication on the part of the manager is essential. The spirit of the presentation review is to review the workers character, manner, potentials and past performance on the job. Performance reviews furnish an employee valuable information regarding their work habits; it identifies are as of improvement and development; it is also a time where changes to compensation and employment are discussed. There are many methods of performance reviews available to management all having the same end in mind that of providing the employee with information and direction. Having a tool that measures employee performance is paramount for the employee as well as management in that it provides a road map for the employee as well as the manager and allows them to strategize future development. A good performance review lets an employee know where they are going and what they need to get there "Employees want to know what they are doing well and where they can improve," says Kristen Leverone, a senior vice president at outplacement and coaching giant Lee Hecht Harrison. "Career conversations are critical to engagement and retention." Performance reviews have evolved throughout the years. No longer is management limited to the traditional or "free form" review where employee per formance was discussed between the supervisor and the employee, with no input from others. (Fakharyan, Behrooz, Dehafarin 2012). Over the years the non-traditional review methods have evolved and are now common practice. The 360-degree review method is one of the newer methods of providing work-related feedback to employees.360-Degree ReviewMany organizations use 360-degree review or multi-source feedback when conducting performance reviews. Approximately 40 percent of organizations use multisource feedback (MSF) in some capacity. Flatter organizations, formalized leadership development efforts, and cross-functional work arrangements have contributed to the prevalence of MSF process The method allows for more excellent feedback in regards to employee job performance in that it solicits information concerning an employee's performance from many sources. In many instances the information garnered from this review method is provided by an employee's co-workers, direct reports, supervi sors, as well as the employee himself. It is very different from the traditional review method in that it is collaborative in nature, and allows for a more comprehensive review of an employee in that colleagues from various departments are given the opportunity to provide feedback regarding an employee this is not possible in a traditional review. The 360 review looks at several characteristics such as an employee's behaviors and traits, past performance, developmental needs, strengths, and weakness. This information is compiled to give an extensive picture of how the person's skills and demeanor are viewed by others. This method of review relieves some of the angst that employees feel in that the supervisor is not solely responsible for the review. "It frees you as in individual and as an organization from being held hostage by the views of your bosses, "said 360 evaluator Bruce Sevy of PDI Ninth House in Minneapolis (Taylor, 2011). Technology has substantially impacted the way i n which review are being conducted. The internet has made it has made convenient for employees, peers, and managers to perform employees reviews online.Conducting an effective 360 Degree ReviewFor reviews to be well received and accomplish their mission, they must be given in a manner that is beneficial to the employee as well as the manager. The 360-degree review is no exception. To conduct a 360-degree review, there are certain roles and responsibilities that need to be followed to create a favorable review. These roles are an administrator, subject, manager, and reviewer. Each of these roles comes with specific responsibilities in the 360-degree review process.The AdministratorThe administrator is responsible for preparing for the review, conducting interviews, presenting results, and aiding the reviewed employee with developmental plans. It is important that the manager of the employee not be the administrator to avoid a conflict of interest. The administrator role is imp ortant in that they serve the interest of the employee, not the manager, and the 360-degree review should be looked like a tool to help an employee develop valuable skills. The purpose of the 360-review is not to judge but to provide feedback and a framework for development.The SubjectThe subject is the person being reviewed by their managers, coworkers, and clients. It is important that the subject understands that this process is a tool to help them in their development, it provides the employee with valuable information regarding their work behaviors and traits through the eyes of others. There is not right or wrong this is the opportunity for the subject to see himself as others see him this may be uncomfortable. It is important that the subject recognizes that the purpose is not to judge but to provide honest feedback to help in development. In some instances, the subject may be asked to review themselves in that it helps to identify any blind spots an employee may have. After the review, the employee can decide to take the information provided to make changes or not, without change there is no growth.The ReviewersTypically the number of reviewers range anywhere from 5-10 people who are asked by the administrator to answer questions concerning the subject with the purpose of providing valuable feedback concerning the subject as well as rate the subjects skills. There will be some working relationship between the subject and the reviewers such as a co-worker, customer, or team member. The manager is not part of this process. The information provided will give the subject insight as to where improvement needs to occur and what skills need to be developed. The raters have a responsibility to the subject in that the information they provide should be constructive, honest, and anonymous.The ManagerManagers play an active role in the 360-review process; their feedback is tracked and recorded separately in that they are approaching this process from a different perspective. Their role is similar to a reviewer in that they will be asked questions concerning the subject's skills, behaviors, and work relationships. The hard part for a manager will be remembering that the goal of the 360 review is not to measure job effectiveness of the employee (Vanek, 2016). The manager and the employee should already know how well they are performing; the information should not be a surprise to the employee. After the review, the manager and the administrator will meet to discuss development options for the subject to assist him with improving skills and relationships. The manager needs to make a commitment to the subject by providing tools, time and encouragement as the subject implements the changes.360-Degree Review and its effects on compensationA 360-degree review is an excellent tool for development and providing employees a road map for future success. The 360-degree analysis promotes leadership skills of an employ. In the process of t he overall individual performance ability and competence one gets to realize their potentials. The realization of one's potentials enables one to advanced in their skills and workstations. The performance review of an organization enables one to make the right and sound decisions for the firm. The reviews based on the continuous 360-degree assessments helps to mitigate any possibility of partiality by bringing multiple choices into the equation. The information enables the organization to impartially address the potential inequality in the work place. The reviews also help in eliminating the fear of failure by encouraging the employs to take risks. The employees are encouraged to develop new ideas. However, the performance reviews also do have negative impacts on the compensations. It is a potential source of stress to most employees. It should be seen as a strategy to solve employee problems but to some employees, it is not the case. Some employees see it as a source of stress. Not very many employees would love to be evaluated. It, therefore, brings sickness to them due to the phobia. The performance evaluation may stifle breakthrough innovation as the pay may not reflect advancement making compensation of difficult to achieve. It is not a useful tool when tied to compensation. There are too many variables that can get in the way that can influence and affect an employee's compensation. Factors such as bias, competitiveness, and lack of understanding are all ways that can influence the outcome of a 360-Degree review and therefore compensation should not be tied to it. Grote said that applying 360-degree feedback to development or coaching "probably doesn't do much harm," but when it is used for determining compensation and promotion, misleading information may be provided "by the office screw-up who does not know anything anyway. And also by the guy down the hall bucking for the same promotion I am (...