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MadMarketScientist

Monetary Tightening Definition

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Monetary tightening is conducted to restrict economic growth by making it more difficult to finance investment capital. One key consequence of tightening policies can be seen with lower inflation levels and a increase in the value of the underlying currency. When consumer spending is affected in this way, the national economy will generally see a decrease in spending and productivity and this will eventually lead the central bank to reverse policy as a way of restarting the economy.

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