Autonomous tightening of monetary policy involves ________.
A)raising interest rates and shifting the MP curve to the right
B)lowering interest rates and shifting the MP curve to the left
C)raising interest rates and shifting the MP curve to the left
D)lowering interest rates and shifting the MP curve to the right
E)none of the above

Question

Quizplus · Accepted Answer

Autonomous tightening of monetary policy involves raising interest rates and shifting the MP curve to the left. This is done in order to reduce inflationary pressures in the economy. Lowering interest rates and shifting the MP curve to the right would be the opposite of autonomous tightening, and would be done in order to stimulate economic growth. Therefore, options A and D are incorrect. Option B would also be incorrect, as lowering interest rates would be an example of autonomous easing of monetary policy, not tightening. Option E is incorrect as it does not provide a valid choice.

Autonomous Tightening of Monetary Policy Involves ________