Tight monetary policy: increase the deposit reserve ratio, increase the deposit and loan interest rates, and increase the discount rate and rediscount interest rate;
Expansionary monetary policy
It is a monetary policy to stimulate aggregate demand by increasing the growth rate of money supply. Under this policy, it is easier to get credit and interest rates will be reduced.
Therefore, when the total demand is low relative to the economic production capacity, it is most appropriate to use expansionary monetary policy. The object of monetary policy adjustment is the money supply, that is, the total purchasing power of the whole society, which is embodied in the cash in circulation and the deposits of individuals, enterprises and institutions in banks. Cash in circulation is closely related to the change of consumer price level, and it is the most active currency, which has always been an important goal for the central bank to pay attention to and adjust.
Tightening monetary policy
It is a policy tool adopted by the central bank to achieve macroeconomic goals. This monetary policy is a policy of tightening money when the economy is overheated, the total demand is greater than the total supply and the economy is experiencing inflation.
The central bank will adopt a tight monetary policy aimed at raising interest rates by controlling the money supply, so as to reduce investment and compress demand. The decline of total demand will make the total supply and total demand tend to be balanced and reduce the inflation rate.
reference data
Tight Monetary Policy-Baidu Encyclopedia
Expansionary Monetary Policy —— Baidu Encyclopedia