MACROECONOMICS

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Oneof the ways in which the Russian government can save the ruble isthrough the contractionarypolicy. The objective of this policy isalways to reduce the money flowing in the economy and makes peoplehave enough to spend. It can be done in three ways. The Russiancentral banks can increase the rate of lending this will make thecommercial banks also increase their rates. Through this, they willdiscourage people from borrowing due to paying high-interest rates.After this is done few people will borrow money, therefore, slowinginflation[ CITATION Man11 l 1033 ].

Increasingthe reserve thatbanksaresupposed to reserve with at the central bank.This is a bit self-explanatory. The more cash the bank is required tosave the less they will have to give out as loans. This will alsomake money scarce, and this will slow down inflation and protect theruble from going south. The third and final measure is reducing themoney that is flowing through the economy. This is always donethrough measures. The government can choose to increase the intereston the bonds they are offering to the public. This will make itattractive to invest in this bond and in return this will leave lesscash circulating in the economy. If this is successful, this willlead to less flow of cash and also the rubble will not depreciatefurther[ CITATION Jam14 l 1033 ].

Encourageexports than imports to deal with a deficit balance of payment.Having relied on oil exports, this makes the country prone in thecase of an oil glut. They should diversify their exports to otherthings such as foodstuff or tourism. This will work in saving therubble from depreciating further[ CITATION Cat13 l 1033 ].

REFERENCES

Mankiv, K. (2011). Principles of Macroeconomics. NewYork: Pearson.

Reid, J. (2014). How to Curb Inflation. Macroeconomics, 56.

Young, C. (2013). The Oil Revolution In Russia. Russia in Recession, 61.

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