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Expansionary Monetary Policy - during a recession when unemployment is a problem
To increase the money supply, the BNM can
- buy government bonds (an open market purchase)
- lower the discount rate
- lower the required reserve ratio
Contractionary Monetary Policy - when inflation is the problem
To decrease the money supply, the BNM can
- sell government bonds (an open market sale)
- raise the discount rate
- raise the required reserve ratio
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Post time: 22-10-2016 01:09:52