If inflation is the major problem in the economy, which of the following would be an appropriate monetary policy response?
A)decreasing government spending
B)decreasing the discount rate
C)decreasing reserve requirements
D)none of the above

Question

If inflation is the major problem in the economy, which of the following would be an appropriate monetary policy response?
A)​decreasing government spending
B)​decreasing the discount rate
C)​decreasing reserve requirements
D)​none of the above

Quizplus · Accepted Answer

Inflation is typically addressed through monetary policy by the central bank, such as increasing interest rates or reserve requirements, not by decreasing government spending (a fiscal policy), decreasing the discount rate, or decreasing reserve requirements, as these actions would likely stimulate demand and potentially increase inflation further.

If Inflation Is the Major Problem in the Economy, Which