Question 29If the Reserve Bank increases the quantity of monetary base, then: the cash rate falls — economists call this contractionary monetary policy the cash rate falls — economists call this expansionary monetary policy the cash rate rises — economists call this contractionary monetary policy the cash rate rises — economists call this expansionary monetary policy

Reserve bank is the central bank of the country that controls money supply.

Answered: the Reserve Bank increases the quantity…

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter29: The Monetary System

Section: Chapter Questions

Problem 10PA

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Question 29

If the Reserve Bank increases the quantity of monetary base, then:

		the cash rate falls — economists call this contractionary monetary policy
		the cash rate falls — economists call this expansionary monetary policy
		the cash rate rises — economists call this contractionary monetary policy
		the cash rate rises — economists call this expansionary monetary policy

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