Monetary policies are tools used by central banks to regulate the economy by influencing the supply of money and credit. Two of the most common monetary policies are the dear money policy and the cheap money policy.



This policy is used to control inflation and slow down the economy. It is characterized by high-interest rates and a reduction in the money supply. Some of the features of the dear money policy include:

• Raising interest rates to discourage borrowing and spending.


• Reducing the money supply by decreasing the amount of money available for borrowing.


• It is usually implemented during times of inflation or when the economy is growing too quickly.

This policy is used to stimulate economic growth and promote borrowing and spending. It is characterized by low-interest rates and an increase in the money supply. Some of the features of the cheap money policy include:

• Lowering interest rates to encourage borrowing and spending.


• Increasing the money supply by making more money available for borrowing.


• It is usually implemented during times of recession or when the economy is growing too slowly.

Some of the key differences between the dear money policy and the cheap money policy include:

• Interest Rates: The dear money policy is characterized by high-interest rates, while the cheap money policy is characterized by low-interest rates.


• Money Supply: The dear money policy is characterized by a reduction in the money supply, while the cheap money policy is characterized by an increase in the money supply.


• Impact on the Economy: The dear money policy is used to slow down the economy, while the cheap money policy is used to stimulate economic growth.

In conclusion, the dear money policy and the cheap money policy are two monetary policies used by central banks to regulate the economy. The dear money policy is characterized by high-interest rates and a reduction in the money supply, while the cheap money policy is characterized by low-interest rates and an increase in the money supply. The choice of which policy to use depends on the prevailing economic conditions.