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Essay text:
Monetary policy is the regulation adopted by the central bank, which stabilizes the prices and maximizes production and employment of the country.
Monetary policy is a regulation of a central bank which controls size and growth rate of the money supply. Monetary policy directly influences the interest rates which in turn has a negative relation with the price level. In the face of inflation the central bank of the country generally resorts to a rise in the cash reserve ratio, repo rate and reverse repo rate. The basic idea is to reduce the money supply in the economy. This would reduce aggregate demand...
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