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When the Fed fears that inflation may be growing at an alarming rate they reduce the money output into the economy. As well banks can
When the Fed fears that inflation may be growing at an alarming rate they reduce the money output into the economy. As well banks can increase or decrease interest rates and loan approvals rates which will have a large impact on how much money people are spending. If the rates are very high then people will not want to get them and will hold off until rates are at a better position. On the flip side if the economy is spending money they can lower interest rates so people will put more money back into businesses
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