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Lowering increase rates would be the Federal Reserve's proper monetary policy if the economy were at point A.
Define Monetary policy.
Controlling the amount of money in an economy and the channels through which it is provided is known as monetary policy. Monetary policy strategy is influenced by economic indicators including the GDP, inflation rate, and industry- and sector-specific growth rates.
Price stability is the main goal of monetary policy. In order to promote sustainable economic growth, the general price level in the domestic economy must stay as low and stable as feasible in order to achieve the goal of price stability.
Maintaining price stability while keeping growth in mind is the basic goal of monetary policy.
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