Monetary Policy

Essay specific features

 

Issue:

Business

 

Written by:

Philip B

 

Date added:

October 11, 2015

 

Level:

University

 

Grade:

B

 

No of pages / words:

3 / 788

 

Was viewed:

2298 times

 

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Essay content:

These actions are called an easy money policy (McConnell & Brue, 2004, p. 275). When the economy is facing inflationary period the Fed must do the opposite of an easy money policy. The Fed must sell government bonds, increase reserve ratio, or increase the discount rate. Excess reserves will decrease causing the money supply to fall...
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Excess reserves will decrease causing the money supply to fall. Interest rates will increase causing investment spending to decrease. Aggregate demand will decrease causing inflation to decline. These actions are called a tight money policy (McConnell & Brue, 2004, p. 275). Buying government bonds will release money into the system causing an increase in Real GDP...
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