Which of the following scenarios below BEST matches an inflationary monetary policy aka a “loose money” policy?   a.Buying bonds increases the money supply, which lowers the interest rate b.Increasing taxes increases the reserve requirements, which decreases investment c.Increasing the discount rate lowers the real interest rate, which raises investment d.Selling bonds decreases the money supply which increases the interest rate e.Decreasing government spending lowers the interest rate, which lowers consumption

Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter14: Modern Macroeconomics And Monetary Policy
Section: Chapter Questions
Problem 7CQ
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Which of the following scenarios below BEST matches an inflationary monetary policy aka a “loose money” policy?

 

a.Buying bonds increases the money supply, which lowers the interest rate

b.Increasing taxes increases the reserve requirements, which decreases investment

c.Increasing the discount rate lowers the real interest rate, which raises investment

d.Selling bonds decreases the money supply which increases the interest rate

e.Decreasing government spending lowers the interest rate, which lowers consumption

 

 

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