Accommodatory Monetary Policy

Definition of 'Accommodatory Monetary Policy'

A policy whereby the supply of money expands to meet the demand for it. This type of policy is desireable in an economy with sustained growth as failure to expand the money supply would otherwise obstruct growth.

However, if the growth is not sustained, then the policy simply allows the rising prices and wages to continue, until excess demand or high inflation eventually forces a return to a more retrictive monetary policy.

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