Monetary policy is an effective tool to:
A)change the prevailing interest rate.
B)lower the inflation rate.
C)lower the unemployment rate.
D)all of the above.
E)A and B only.

Question

Quizplus · Accepted Answer

Monetary policy, implemented by a country's central bank, can influence the economy in several ways. It can change the prevailing interest rate through adjustments in the policy rates, which in turn can affect borrowing and spending behaviors. Lowering interest rates can stimulate economic activity, potentially reducing unemployment. Additionally, monetary policy can be used to control inflation by adjusting the money supply. Therefore, all of the options (A, B, and C) are correct applications of monetary policy.

Monetary Policy Is an Effective Tool To