Monetary policy has traditionally focused on the
A) long-term nominal interest rate.
B) short-term nominal interest rate.
C) long-term real interest rate.
D) short-term real interest rate.

Question

Quizplus · Accepted Answer

Monetary policy has traditionally focused on the short-term nominal interest rate. The central bank adjusts the short-term interest rate to influence borrowing and spending in the economy, which affects inflation and employment levels. By manipulating the interest rates, the central bank can encourage or discourage spending and credit creation, thereby impacting the overall health of the economy.

Monetary Policy Has Traditionally Focused on the