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When inflation results from excess demand for goods and services, central banks’ typical response is to increase interest rates. The usual transmission mechanism is: a reduction in money supply (tightening monetary policy) increases interest rates, which is expected to reduce overall spending (both consumption and investment) thus leading in an overall demand reduction...
4 Sep 2014 | Syed Zahid Ali, Kashif Zaheer Malik, Syed Muhammad Hussain
