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Monetary Policy
Essay specific features
Written by:
Philip B
Date added:
October 11, 2015
Level:
University
Grade:
B
No of pages / words:
3 / 788
Was viewed:
2298 times
Rating of current essay:
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...
displayed 300 characters
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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...
displayed 300 characters
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