ECO 372 Week 3 Discussion Question 2 - 90395

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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? There are different types of monetary policy. One example is the expansionary monetary policy. The expansionary monetary policy increases the money supply, while it decreases the interest rate. The expansionary money policy is supposed to decrease unemployment as it raises the demand level. Increasing demand should increase production thus increasing necessary jobs, which decreases unemployment. An expansionary monetary policy could increase inflation and increase capital outflow, which is undesirable. The trade deficit may increase as well. A contractionary monetary policy decreases the money supply, while it increases the interest rate. The contractionary monetary policy intentions are to decrease the level of demand. The contractionary monetary policy will help control inflation, and increase capital inflow. The trade deficit may decrease as well. The level of unemployment may increase, leading to slower growth, and a possible recession...
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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 w

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