IMPACT OF MACRO
ECONOMIC FACTORS ON MONEY SUPPLY IN NIGERIA
ABSTRACT
The
research is an appraisal of the impact
of macroeconomic factors on money supply in Nigeria. It identify and
analyzes macro economic factors, money
supply and profers the significance and impact of macro-economic factors on
money supply .
INTRODUCTION
The
interplay or relationship between various macroeconomic factors is the subject
of a great deal of study in the field of macroeconomics. While macroeconomics
deals with the economy as a whole, microeconomics is concerned with the study
of individual agents such as consumers and businesses and their economic
decision-making
The factors in the
external environment not subject to the control of a manager generally can be
regarded as macro-economic factors or variables.
The
corporate managers cannot control the macro economic variables but the
government can control them through several policies. Thus, like all
experts, the government in order to do a good job of managing the economy, will
have to study, analyze and understand the major variables that affect or
determine the current behavior of the macro-economy. Examples of the
macro-economic variables that affect the economy and firms majorly include
exchange rate, foreign direct investment, inflation rate, interest rate, money
supply, etc. The management of these variables is usually done through
fiscal and monetary policy by the government and her agencies e.g. the Central
Bank.
CHAPTER 1
1.1 BACKGROUND OF THE STUDY
Monetary
policy is the regulationadopted by the central bank, which stabilizes the
prices and maximizes production and employment of the country. Monetary policy
is a regulation of a central bank which controls size and growth rate
of the money supply. Monetary policy directly influences the interest
rates which in turnhas a negative relation with the price level. In the face of
inflation the central bank of the country generally resorts to a rise in
the cash reserve ratio, repo rate and reverserepo rate. The basic idea is to
reduce the money supply in the economy. This would reduce aggregate demand.
This reduction would again help reduce the price level.
Monetary policy is adopted with an
objective to make the most of production andemployment and consequently
stabilize the price level of a country. Monetary policyalso regulates the
interest rate, availability of credit and at the same time promotes theoverall
economic growth of a country. The research intends to appraise the impact
of macroeconomic factors on money supply
in Nigeria
1.2 STATEMENT OF THE PROBLEM
The problem confronting the research
is to appraise the impact of macro-economic factor .
It
shall provide a detail analysis of the
concept of macro-economic factor and
money supply and elucidate the impact of various economic factor on money
supply.
1.3 RESEARCH
QUESTION
1 What
constitute macro economic factors?
2
What is the nature of money supply?
3
What is the impact of macroeconomic factor on
money supply in Nigeria?
1.4 OBJECTIVE OF THE STUDY
1
To provide a conceptual and theoritical appraisal of macroeconomic
factors and money supply
1
To determine the
impact of macroeconomic factors on money supply in Nigeria
1.5 SIGNIFICANCE OF THE STUDY
The study shall provide a detail
analysis of macro-economic factors ,money supply and the impact of macro-economic
factors on money supply in Nigeria
It
shall also serve as a veritable source of information on issues of
macroeconomic Factors and money supply.
1.6 STATEMENT OF HYPOTHESIS
1
H0 Money
supply is not significant to the economy
of Nigeria
H1 Money
supply is significant to the economy of Nigeria
2 H0 The
level of money supply is low
H1 The
level of money supply is high
2
H0 The impact of macro-economic factor on money
supply is low
H1 The impact of macro-economic factor on money
supply is high
1.7 SCOPE OF THE STUDY
The
study focuses on the appraisal of the
impact of macroeconomic factor
on money supply in Nigeria
1.8 DEFINITION OF TERMS
MONETARY POLICY
Monetary policy is the regulation adopted
by the central bank, which stabilizes the prices and maximizes production and employment
of the country. Monetary policy is a regulation of a central bank which
controls size and growth rate of the money supply. Monetary policy
directly influences the interest rates which in turn has a negative relation
with the price level. In the face of inflation the central bank of the
country generally resorts to a rise in the cash reserve ratio, repo rate and
reverserepo rate. The basic idea is to reduce the money supply in the economy.
This would reduce aggregate demand. This reduction would again help reduce the
price level.
MACRO ECONOMIC FACTOR
Macro-economic
deals with the economy as a whole, microeconomics is concerned with the study
of individual agents such as consumers and businesses and their economic
decision-making
The factors in the
external environment not subject to the control of a manager generally can be
regarded as macro-economic factors or variables.
The corporate
managers cannot control the macro economic variables but the government can
control them through several policies. Thus, like all experts, the
government in order to do a good job of managing the economy, will have to
study, analyze and understand the major variables that affect or determine the
current behavior of the macro-economy. Examples of the macro-economic
variables that affect the economy and firms majorly include exchange rate,
foreign direct investment, inflation rate, interest rate, money supply,
etc. The management of these variables is usually done through fiscal and
monetary policy by the government and her agencies e.g. the Central Bank.