Suppose the monetary authority sets a target of 1% to 2% inflation per year. If the economy experiences deflation, the appropriate monetary policy is
A) a contractionary monetary policy.
B) no change to monetary policy.
C) a quantitative easing.
D) a balanced budget.

Question

Quizplus · Accepted Answer

Quantitative easing is a form of expansionary monetary policy used to stimulate the economy by increasing the money supply, which can help counteract deflation by encouraging spending and investment.

Suppose the Monetary Authority Sets a Target of 1% to 2