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Economic Challenges Facing Global and Domestic Business - page 22 / 24

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Monetary Policy - government actions to increase or decrease the money supply and change banking policy and interest rates to influence consumer spending.

Expansionary monetary policy: Efforts to increase the money supply to reduce costs of borrowing and encourage new investment.

Restrictive monetary policy: Efforts to decrease the monetary supply to curb rising prices and overexpansion.

The Federal Reserve System formulates and implements monetary policy.

Government uses monetary and fiscal policy to fight unemployment,

increase spending, and reduce the duration and severity of economic recession.

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