Explain how monetary policy can promote economic growth
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In this way, the main role of monetary policy lies in its capacity to promote economic growth by influencing the cost and supply of credit, by controlling inflation and by maintaining balance of payments equilibrium in less developed countries. ... The growth rate of capital formation has also to be increased.
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in a developing country is to promote economic growth it must aim at raising the rate of saving. ... Therefore, with the rise in rate of inflation nominal rate of interest should also be raised to keep incentives for saving intact.
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