Which list represents monetary policy actions that are consistent with one another?
A) buy government bonds, raise reserve requirements, raise the discount rate
B) sell government bonds, raise reserve requirements, lower the discount rate
C) sell government bonds, lower reserve requirements, raise the discount rate
D) buy government bonds, lower reserve requirements, lower the discount rate

Question

Quizplus · Accepted Answer

The actions in choice D are consistent with expansionary monetary policy. Buying government bonds helps increase the money supply, lowering reserve requirements also increases the amount of lendable funds held by banks, and lowering the discount rate encourages borrowing and lending. Hence, this option is the best choice.

Which List Represents Monetary Policy Actions That Are Consistent with One