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- Review Of Research
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Abstract (Original Language):
The term is also known as the 'credit policy' or called 'RBI's
money management policy' in India. How much should be the supply of money in the
economy? How much should be the ratio of interest? How much should be the viability of
money? etc. Such questions are considered in the monetary policy. From the name itself it
is understood that it is related to the demand and the supply of money. Monetary policy
rests on the relationship between the rates of interest in an economy, that is the price at
which money can be borrowed, and the total supply of money. Monetary policy uses a
variety of tools to control one or both of these, to influence outcomes like economic
growth, inflation, exchange rates with other currencies and unemployment. Where
currency is under a monopoly of issuance, or where there is a regulated system of issuing
currency through banks which are tied to a central bank, the monetary authority has the
ability to alter the money supply and thus influence the interest rate (to achieve policy
goals).
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