Wednesday 18 May 2011

Explain the concept of a "loose monetary policy"

A loose monetary policy is one in which tries to increase spending in an economy that is seen to be growing to slowly. The way you do this is by reducing interest rates, which in turn will increase consumer spending as borrowing money is cheaper and more attractive.

2 comments:

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  2. Surely there are ways other than interest rates - what happens when they reach 0.5%?

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