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we learned about the money supply

we learned about the money supply - . monetarypolicy....

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 we learned about the money supply. This is the starting point for understanding  monetary policy. Initially we defined the money supply as the total amount of currency  held by the public. While this definition is correct, it is incomplete. we learned that  through a fractional reserve banking system, the money supply increases. Thus, the  money supply is better defined as the total amount of currency plus deposits held by the  public. This accounts for all mony available as currency or demand deposits.  Simply stated, monetary policy is carried out by the Fed to change the money supply.  When the Fed increases the money supply, the policy is called expansionary. When the  Fed decreases the money supply, the policy is called contractionary. These policies, like  fiscal policy, can be used to control the economy. Under expansionary monetary policy  the economy expands and output increases. Under contractionary monetary policy the 
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