Monetary policy affects real GDP by
A) changing aggregate supply.
B) creating budget surpluses.
C) changing aggregate demand.
D) creating budget deficits.

Question

Quizplus · Accepted Answer

Monetary policy primarily influences the economy by changing interest rates, which in turn affects aggregate demand. Lower interest rates can stimulate borrowing and spending, while higher rates can do the opposite, thus impacting the overall demand in the economy.

Monetary Policy Affects Real GDP by