ECO 372 Week 3 DQ 1 - Version 5

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What is the difference between contractionary and expansionary monetary policy? What is the intention of each policy under a depression, recession, or robust economy? Which type of monetary policy is more appropriate today and why?

Response
Contractionary policy is when the government use a set of tools to slow doe the rate at which the economy is growing. This is a tool used so the economy doesn’t grow too fast. This helps to regulate money flow, credit flow throughout the economy, interest rate and the currency exchange too name a few. It also helps to reduce the amount the government is spending, increase taxes, and regulations. It is also when it reduces its monetary base by selling some of its government debt securities.
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