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Wordcount: 2149
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Government・s Role in the Economy
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The government plays a major role in keeping the economy steady. Through the Federal Reserve, the government can determine the quantity of money in the economy. Most economists agree that the quantity of money supplied affects the overall price level, interest rates, the unemployment rate, and the level of output.
The Monetary Policy is the regulation of the money supply and interest rates by a central bank, such as the Federal Reserve Bank, in order to control inflation and stabilize currency. That part of the government・s economic policy which tries to control the size of the total stock of money (and other highly liquid financial assets that are close substitutes for money) available in the national economy in order to achieve policy
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