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Multiple Choice Question

The management of the money supply and raising and lowering interest rates by the Federal Reserve Bank is called:

A. Fiscal policy
B. Income policy
C. Regulatory policy
D. Monetary policy

Sagot :

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Final answer:

Monetary policy is the management of the money supply and interest rates by the Federal Reserve to influence credit costs and economic growth.


Explanation:

Monetary policy is the management of the money supply and interest rates by the Federal Reserve Bank to influence the cost of credit. The Federal Reserve uses tools such as the discount rate, reserve requirements, and open market operations to control the money supply.

Expansionary monetary policy increases the money supply to stimulate economic growth, while contractionary policy decreases the money supply to control inflation. The Federal Reserve plays a crucial role in maintaining economic stability and promoting growth through its monetary policy decisions.


Learn more about Monetary policy here:

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