ABSTRACT

The highly unstable economic conditions in Nigeria have been a major source of concern among economist and policy makers in recent time. These economic problems can be attributed to the existence of market failure and the inability of the mechanism to efficiently allocate scarce resources among economic agent. This research work is sets out to examine the extent to which government Interventions through monetary policy have been able to regulate the economy by ensuring the general price stability and economic growth. From the research work, we discovered that monetary policy through the use of the instruments of interest rate, exchange rate, treasury bills and money supply has been a major instrument used to boast economic growth and achieve economic stabilization. This work also viewed the different schools of thought and their option about the use effects and setbacks of monetary policy in stabilization of an economy, the classical and the Cambridge model viewed money as a store of value and they believed that increase in money will cause some increase in price, while the Keynesian argued that money is demanded for 3 purposes and concluded with their liquidity theory and lastly the monetarist believe that demand is a stable function of money variable and money supply. This work also focused on the means or mechanism through which this policy is been affected in the economy, the Apex bank (CBN) been the avenue through which the government extend this policy, the Apex bank also through some means which included a direct and indirect mechanism to extend this policy to the Commercial bank and then to the general public. This research work consist of a dependent variable in its hypothesis and some independent variable to explain the importance of monetary policy and its effect on Gross Domestic Product (GDP) in the economy, a least square regression method was adopted to derive the significant of the independent variable on the dependent variable. A data covering the duration of 35 years (1980 – 2015) was introduced in the model, the result was established, interpreted and conclusion was drown with recommendation.