We
first of all see the meaning of the term tight money. Tight money is a common term used to refer to
an economy that does not have a great deal of money in circulation. In the case
where we see the tight money accelerates the economic growth that shows us the
increase in money in circulation which results to:-
·
Keeping the
national economy steady and a rapid growth with the features of growth in
economy, optimized structure, increase in efficiency and improved livelihood of
the
people.
·
There is also a
rapid increase in industrial production by creating more wealth in the real
economy by expending production capacity with improve in economic returns.
·
It restrain the
economy by making people to purchase more goods and services which decrease
production and employment which leads to increase in unemployment rates which
is a threats to inflation strong in the light of the rising global commodity
and energy prices.
TIGHT MONEY IMPEDES ECONOMIC GROWTH
In the area of impeding growth in the economy which
results to problems of having more money in the circulation and the growing gap
between productive capacity and demand which impedes the reversal of the
current economic downturn.
The thought behind strategy is that if more money is
released the amount of money will rise more than the amount of goods and
services that can be purchased with it which can results in making goods and
services scarcer than money.
And it can be control with the following points
below:-
·
Lightening of
monetary policy so as to bring inflation down to single digits.
·
By impeding the
economy it will help to restore macro economic stability and reduce the
economy’s vulnerability to oil price shocks.
· It contributes to
lower inflation and induces price which also create a more stable exchange
rates.
Furthermore, the negative impact of the political
crises in the oil-producing middle East and North African (MENA) region on oil
prices and the disruptions and destructions associated with the earthquake and
tsunami in Japan has added to uncertainty about the sustainability of global
economic recovery and growth. The implications of theses developments together
with the likelihood of sharp increases in international interest rates for the
Nigerian economy need to be kept under to be kept under continuous watch.