Which of the following is an example of a monetary policy?
A) The federal government decreases income tax rates on people earning less than $40 000.
B) The Bank of Canada redesigns the $20 bill.
C) The central bank takes action to increase the money supply during an economic recession.
D) Congress authorizes an increase in spending on health care.

Question

Quizplus · Accepted Answer

Monetary policy refers to actions taken by the central bank to influence the money supply and interest rates to achieve macroeconomic objectives such as price stability, full employment, and economic growth. Option C represents an example of monetary policy because increasing the money supply during an economic recession can stimulate economic activity by making credit more easily available and lowering interest rates. The other options do not represent actions taken by the central bank to influence the money supply or interest rates.

Which of the Following Is an Example of a Monetary