monetary policy

  

Definition

Economic strategy chosen by a government in deciding expansion or contraction in the country's money-supply. Applied usually through the central bank, a monetary policy employs three major tools: (1) buying or selling national debt, (2) changing credit restrictions, and (3) changing the interest rates by changing reserve requirements. Monetary policy plays the dominant role in control of the aggregate-demand and, by extension, of inflation in an economy. Also called monetary regime. See also monetarism.

Use monetary policy in a sentence

  • I was interested in monetary policy because it determines our countries livelihood to a great degree, especially because our future is impacted by this as well.

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  • Giving the flagging economy, the president's top financial advisers were concerned about the pressure he was receiving to print more money, but decided to wait for the new monetary policy before questioning the commander in chief.

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  • The monetary policy favored by the current government had lead the country to lessen their current spending while purchasing other country's debt, allowing them to control inflation and increase their country's savings.

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