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By: a guest on Feb 22nd, 2012  |  syntax: None  |  size: 0.33 KB  |  views: 9  |  expires: Never
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  1. Monetary policy involves using policy instruments such as the interest rate and money supply to influence aggregate demand in the economy. Many firms and consumers use borrowed money to pay for goods and services. Consequently, changes in the interest rate will influence the amount borrowed and therefore the amount of demand in the economy.
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