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Monetary And Fiscal Policy
Part one of term paper
The Monetary and Fiscal Policies, although controlled by two
different organizations, are the ways that our economy is kept under
control. Both policies have their strengths and weaknesses, some
situations favoring use of both policies, but most of the time, only
one is necessary. ...
Part two of term paper ... has three tools to
manipulate the money supply. They are the reserve requirement, open
market operations, and the discount rate.
The most powerful tool available is the reserve requirement.
The reserve requirement is the percentage of money that the bank is
not allowed to loan out. If it is lowered, banks are required to
keep less money, and so more money is put out into circulation
(theoretically). If it is raised, then banks may have to
collect ...
Word count: 925 | Approximate pages: 4
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