This question has 3 parts each worth 10 point. This question is related to the monetary...

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Finance

This question has 3 parts each worth 10 point. This question isrelated to the monetary policy.
i) (10 points) What is the difference between a stimulativemonetary policy and a restrictive monetary policy? In whatcircumstances should each of the policies be used?
ii) (10 points). Discuss the effect of an expansive(stimulative) monetary on the cost of debt, on the cost of equity,and total cost of capital of a firm?
iii) (10 points). During the initial recovering of the businesscycle, which (stimulative or restrictive) monetary policy should beused? Why?

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Ans i Stimulative monetary policy When central bank reduce its interest rate and push more money in the economy This policy is mainly used by the central back when growth rate of the See Answer

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This question has 3 parts each worth 10 point. This question isrelated to the monetary policy.i) (10 points) What is the difference between a stimulativemonetary policy and a restrictive monetary policy? In whatcircumstances should each of the policies be used?ii) (10 points). Discuss the effect of an expansive(stimulative) monetary on the cost of debt, on the cost of equity,and total cost of capital of a firm?iii) (10 points). During the initial recovering of the businesscycle, which (stimulative or restrictive) monetary policy should beused? Why?