The policy where a central bank influences the level of short-term interest rates in order to affect inflation is:

Question

Quizplus · Accepted Answer

The policy described is monetary policy, where a central bank (such as the Federal Reserve in the US) manipulates short-term interest rates to achieve its inflation target. Fiscal policy involves government spending and taxation decisions, while economic policy is a broader term that encompasses a range of government actions to manage the economy. Inflation rate policy is not a commonly used term in economics.

The Policy Where a Central Bank Influences the Level of Short-Term