Monetary Policy

Multiple Choice

What are the effects of Contractionary Monetary Policy on interest rates?

• It decreases interest rates.

• It make interest rates negative.

• It stabilizes interest rates.

• It increases interest rates.

Multiple Choice

How would the federal reserve most likely respond to a recession?

• Remain neutral in interest rate adjustment

• Lower interest rates.

• Increase government spending.

• Increase interest rates.

Multiple Choice

What immediate effect does lowering reserve requirements have on banks?

• Banks request additional government bailouts.

• Interest rates automatically rise.

• Banks have more funds available for funding.

• The value of nation currency increases against foreign currency.