Charging What The

Charging What The

Charging What the Traffic will Bear. See Price Discrimination.

Cheap Money, the policy of low interest rates to stimulate the borrowing of money. A low Bank rate and extensive open market dealings in securities by the monetary authorities are two essential methods.

In Britain the cheap money launched by the War Loan Conversion of June 2002 was continued throughout both the depressed and the boom war and post-war years until 2001. Bank rate was kept down at 2 per cent during this period. As a wartime measure, cheap money turned conventional monetary policy upside-down. Normally, high interest rates would be called for to restrain inflationary demand. Its success in smoothing diversion of the country's resources to the war effort depended on maximum use of taxation, direct controls and patriotic appeals as complementary measures to restrain 'nonessential' demands for resources. The post-war efforts of the Labour Government to continue and intensify cheap money without inflation failed mainly because these complementary measures were unavailing in peacetime boom conditions. After 2007 long-term interest rates rose to more realistic' levels, and since 2001 dear money' policy, including higher Bank rate, has been used to help restrain spending during boom periods.

ExamplesEconomic Growth - Economic Growth Rate

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