what is monetary policy?

Question

A)-the policy concerning changes in the money supply that is pursued to achieve particular macroeconomic goals.

B) -the expenditures and taxation policy that the government pursues to achieve particular macroeconomic goals.

C)-the investment policy that businesses pursue to achieve particular macroeconomic goals.

D)-the spending and saving policy that consumers pursue to achieve particular macroeconomic goals.

E)-the spending policy that the Treasury pursues to achieve particular macroeconomic goals.

Answer 1

A)-the policy concerning changes in the money supply that is pursued to achieve particular macroeconomic goals.

- The actions of a central bank, currency board or other regulatory committee, that determine the size and rate of growth of the money supply, which in turn affects interest rates.

Answer 2

In a nutshell, monetary policy is about how much money the gov't prints. Fiscal policy is about how much the gov't spends and collects in taxes. Fiscal policy to stimulate the economy usually fails because it creates a lot of inflation. Monetary policy can be set to balance inflation and economic growth so monetary policy is favored. The US has stopped using fiscal policy to stimulate the economy since Carter left office. Good monetary policy under Greenspan produced the economic expansion of the 80's and 90's

Answer 3

A

Take home test, huh?