Monetary Policy

by  Keir Ketel

Monetary Policy refers to the the process governments use to control money. In many countries, Monetary policy is controlled by a central bank. Central Bankers usually use a few different tools at their disposal in order to control the money supply, availability of credit, and the interest rates. Many economists feel that monetary policy can have a deleterious effect on the macro economy if used improperly . A monetary policy that restricts the availability of credit would be considered tight, while a policy that expands the availability of credit would be considered loose. Many economists feel that monetary policy has a significant impact on the economic growth of a country and can have an adverse affect as well, resulting in inflation.

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