Monetary Policy
Monetary policy refers to the actions taken by a nation's central bank to control the money supply and interest rates in the economy. Its main goals are to promote stable prices, maximum employment, and economic growth. By adjusting interest rates and regulating how banks lend money, the central bank can influence spending and investment. For instance, lowering interest rates makes borrowing cheaper, encouraging spending, while raising rates can help cool off an overheated economy. Essentially, monetary policy helps manage economic fluctuations and maintain a stable financial environment.
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Monetary policy refers to the actions taken by a country's central bank to manage the economy's money supply and interest rates. By adjusting these factors, the central bank influences inflation, employment, and overall economic growth. For example, lowering interest rates makes borrowing cheaper, encouraging spending and investment, while raising rates can help control inflation by making loans more expensive. Essentially, monetary policy helps stabilize the economy, ensuring it grows at a healthy pace without overheating or contracting too rapidly.