PRC-3 · Chapter 19 · Question 17 of 17
Which of the following actions constitutes an 'Expansionary Monetary Policy' designed to pull an economy out of a severe recession?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) The central bank drastically lowering its discount/bank rate
Explanation
Lowering the discount rate makes borrowing cheaper for commercial banks and consumers, injecting liquidity and encouraging spending to fight a recession.
More Monetary Policy MCQs
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- Q3Which of the following is NOT a standard tool used by a country's Central Bank to conduct Monetary Policy?
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- Q6The nation is suffering from soaring inflation. To cool down the economy, the Central Bank decides to use a contractionary monetary…