Understanding Monetary Policy Types

Front

Which of the following best describes the primary goal of expansionary monetary policy? Options: To increase the money supply and lower interest rates, To decrease the money supply and raise interest rates, To stabilize the currency exchange rate, To reduce government spending

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To increase the money supply and lower interest rates

Front

Which of the following is a characteristic of a tight monetary policy? Options: Lowering interest rates to encourage borrowing, Increasing the money supply to boost economic growth, Raising interest rates to control inflation, Reducing the reserve requirement for banks

Back

Raising interest rates to control inflation

Front

Which of the following scenarios is most likely to prompt a central bank to adopt an expansionary monetary policy? High inflation rates, A booming economy with low unemployment, A recession with high unemployment, A stable economy with balanced growth

Back

A recession with high unemployment