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Monetary Policy

Meaning of Monetary Policy

Monetary policy. generally, refers to those policy measures of the central bank which are adopted to control and regulate the supply of money, the cost and availability of credit in the country. Monetary policy consists of those monetary decisions and measures the aim of which is to influence the monetary system. According to Paul Einzing, an ideal monetary policy mat be defined as “the effort to reduce to a minimum the disadvantages and increase the advantages. resulting from the existence and operation of monetary system.:

Broadly speaking, by monetary policy is meant the policy pursued by the central bank of a country for administering and controlling country’s money supply including current and demand deposits and managing the foreign exchange rates. The central bank of a country through its monetary policy manipulates the money supply, credit, government expenditure, and rates of interest in such a manner so that the monetary system may be beneficial to the maximum extent.

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