Which of the following is NOT true of tightening of monetary policy?

Question

Quizplus · Accepted Answer

Tightening of monetary policy means the central bank is trying to decrease the money supply in the economy, and this is typically done by selling government securities in open-market operations. As a result, banks' supplies of funds are depleted (A), and bank lending is reduced (D). Additionally, the reduction in the money supply usually leads to higher interest rates (not lower) (B) and may strengthen the value of the currency (C).

Which of the Following Is NOT True of Tightening of Monetary