Monetary policies can be referred to as demand-side macroeconomic policies. They operate by promoting or restraining spending on goods and services. Economy-wide recessions and booms reflect rises and falls in collective demand instead of in the economy’s productive capacity. Monetary policy attempts to reduce, or remove these variations (Pechman). It utilizes modifications in the money supply to alter interest rates and accelerate economic activity. Two types of monetary policy are expansionary and contractionary. When the Federal Reserve increases money supply, the policy is expansionary. When the Federal Reserve decreases money supply, the policy is contractionary (Sparknotes). Under expansionary monetary policy, the economy grows a...
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...nment Macroeconomic Policy." Tutor2u | Economics | Business Studies | Politics | Sociology | History | Law | Marketing | Accounting | Business Strategy. Web. 22 Oct. 2011.
Mankiw, Greg. "Four Goals of Tax Policy." Greg Mankiw's Blog. Web. 22 Oct. 2011.
Pechman, Joseph A. Federal Tax Policy. Washington: Brookings Institution, 1971. Print.
"SparkNotes: Tax and Fiscal Policy: Monetary Policy." SparkNotes: Today's Most Popular Study Guides. Web. 21 Oct. 2011.
Weil, David N. "Fiscal Policy: The Concise Encyclopedia of Economics." Library of Economics and Liberty. Web. 21 Oct. 2011.
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