B monetary policy monetary policies also known as

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b) Monetary Policy Monetary policies also known as contractionary policies. Increase reserve requirements on the amount of money banks are legally required to keep on hand to cover withdrawals. The more money banks are required to hold back, the less they have to lend to consumers. If they have less to lend, consumers will borrow less, which will decrease spending.
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7. Five reasons why does country needs to achieve high economic growth. 1) To decrease the rate of unemployment. When economics growth , firms produce more output and firms tend to hired more workers to produce more output. 2) Reduce government borrowing. Economic growth creates higher tax revenues and there is less need to spend money on benefits such as unemployment benefits. 3) Improved public services. With increased tax revenues, the government spend more on public services such as education. 4) Increase technology development. Technology development helps in increasing productivity with the limited amount of resources. The selection of right technology also plays an role for the growth of an economy.Capit 5) Capital formation increases the availability of capital per worker, which further increases capital/labor ratio. Consequently, the productivity of labor increases, which ultimately results in the increase in output and growth of the economy. 8. a)(i))Reserve requirement ratio The percentage of deposit which commercial banks are required to keep as cash according to the directions of central bank. (ii) Bank Rate Bank rate is the rate charged by the central bank for lending funds to commercial banks. Bank rates influence lending rates of commercial banks. Higher bank rate will translate to higher lending rates by the banks. In order to curb liquidity, the central bank can
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