Which of the following best describes a monetary policy tool

Asked by wiki @ 19/06/2021 in Social Studies viewed by 317 People

Which of the following best describes monetary policy?

O
A. Determining the design printed on the national currency
O
B. Managing the economy by controlling the money supply
O
C. Raising and lowering the foreign exchange rate
O
D. Regulating transactions in the currency exchange market

Answered by wiki @ 19/06/2021

Answer:

B. Managing the economy by controlling the money supply.

Explanation:

Monetary policy is one of the tools that governments have to influence economy.
It is usually implemented by central banks (in USA, by the FED), and it consists on using available instruments (like bonds' supply, rediscount rates, money supply, etc), to exert controll over the supply of money, and the interest rates (when possible), in order to achieve specific goals, like controlling inflation.

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