Central banks can use monetary policy to
A) reduce interest rates.
B) decrease taxes.
C) increase government spending.
D) steer the economy out of every recession.
E) prevent recessions.

Question

Quizplus · Accepted Answer

Central banks can use monetary policy to reduce interest rates, which can stimulate borrowing and spending, therefore boosting economic activity. However, monetary policy alone cannot steer the economy out of every recession or prevent recessions entirely.

Central Banks Can Use Monetary Policy to