Monetary policy may be defined as
A) a policy designed to increase or decrease the flow of money and credit.
B) a policy designed to increase or decrease the ability of consumers to spend money.
C) a policy designed to increase the convertability of paper money into gold.
D) a policy designed to develop money that is more resistant to counterfeiters.

Question

Quizplus · Accepted Answer

Monetary policy is specifically concerned with managing the supply and demand of money and credit in the economy. This is typically done by adjusting interest rates, reserve requirements, and the buying and selling of government securities by central banks. Option B refers to fiscal policy, not monetary policy. Option C describes the gold standard, which is no longer used in most countries. Option D is referring to measures taken by central banks to prevent counterfeiting, but this is not the main focus of monetary policy.

Monetary Policy May Be Defined as