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China Moves To Tighten The Money Supply
Essay specific features
Written by:
Ella W
Date added:
November 16, 2012
Level:
University
Grade:
A
No of pages / words:
2 / 372
Was viewed:
2567 times
Rating of current essay:
Essay content:
When the money supply in an economy increases, interest rates decrease. With lower interest rates, an increase in the level of investment spending will occur. This then will cause the level of aggregate demand to increase, and in doing so will push the economy beyond full employment and cause the real GDP to rise to its maximum potential...
displayed 300 characters
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All of this will cause the price level to rise creating inflation.
One of the main functions of China’s central bank is to regulate the countries money supply, and it is able to do it through monetary policy. In an effort to control this situation, China’s central bank has taken a contractionary monetary policy and has raised the reserve ratio for the commercial banks...
displayed 300 characters
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