Abstract:
The constraint conditions of monetary policy in regulating include three aspects: economic resources without actual use, credit degree of national economy, and slope of the supply curve. When the slope of the supply curve is K1=0, the regulatory role of monetary policy is the largest; when the slope of the supply curve is K2=（y2-y1）/（x2-x1）>0，monetary policy can effectively play a role of regulation, the size of its regulation efficiency depends on the contrast between output level and price level. When the slope of the supply curve is K3=（y3-y3）/（x3-x3）＜0, supply curve and demand curve driven by monetary policy have similar trends, expansionary monetary policy suppresses economic growth while also inhibiting the growth of the economy, but tighter monetary policy can promote economic growth, at the same time accompanied by a decline in the price level, this is a relatively extreme phenomenon. When the slope of the supply curve is K4=∞, monetary policy falls into a “liquidity trap”, it is completely unable to effectively promote economic growth. Currently, global monetary policy has been moving towards differentiation, the international financial market is characterized by turbulence and intranquility, being ridden with crises, China’s economic growth is facing downward pressure while also exists potential systemic financial risk. Future monetary policy requires fiscal policy to cooperate. Viable options are likely to implement proactive fiscal policy to stabilize economic growth, implementing tight monetary policy to prevent systemic financial risk.
