Which of the following monetary policies reduces aggregate demand and output?
A)A cut in the federal funds rate
B)An open market purchase of government securities
C)An increase in the discount rate
D)A cut in the required reserve ratio

Question

Quizplus · Accepted Answer

An increase in the discount rate makes borrowing more expensive for banks, which in turn can lead to higher interest rates for consumers and businesses. This can reduce borrowing and spending, leading to a decrease in aggregate demand and output.

Which of the Following Monetary Policies Reduces Aggregate Demand and Output