Monetary restraint is associated with all of the following except
A)A decrease in interest rates.
B)A decrease in the money supply.
C)An increase in the reserve requirement.
D)A decrease in aggregate demanD.Lower interest rates are associated with monetary stimulus.

Question

Quizplus · Accepted Answer

Monetary restraint is typically associated with an increase in interest rates, not a decrease. Thus, option A is not a characteristic of monetary restraint. B is correct because a decrease in the money supply is a common feature of monetary restraint. C is also correct as an increase in the reserve requirement is a tool used to reduce lending, which is associated with monetary restraint. D is incorrect because monetary restraint does not necessarily lead to a decrease in aggregate demand; it could lead to a decrease in inflationary pressures.

Monetary Restraint Is Associated with All of the Following Except