Monetary Policy and Macroeconomic Stabilization

Easy money policy:monetary policy that increases the money.

Tight money policy: monetary policy that reduces the money supply

Monetarism: the belief that the money supply is the most important factor in macroeconomic performance.

Inside lags: delay in implementing monetary policy

Outside lag: the time it takes for monetary policy to have an effect

Monetary policy works when the money supply and interest rates make it go up and down and the more you borrow the higher the interest rate is.

The business cycle and stabilization coin-side with each other

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