'Monetary policy' targets the:
A)long-term real rate of interest.
B)long-term nominal rate of interest.
C)short-term real rate of interest.
D)short-term nominal rate of interest.

Question

Quizplus · Accepted Answer

Monetary policy targets the short-term nominal rate of interest, which is the interest rate set by the central bank to control the money supply and inflation. This rate influences borrowing and lending decisions, investment decisions, and ultimately, economic activity. By controlling this rate, central banks aim to stabilize the economy and achieve their inflation targets.

'Monetary Policy' Targets The