easy monetary policy

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A policy of having low interest rates and easy access to credit, to stimulate real economic activity. Such a policy is likely to be adopted in times of depression, when investment and employment are both below normal. A danger of easy monetary policy is that entrepreneurs may be tempted by easy credit to start up businesses which are viable only with very low interest rates, but are not sufficiently profitable to pay the normal interest rates which are likely to be restored when the economy recovers.

Subjects: Economics.

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