Question

The use of the money supply to influence the economy is: a. initiated through actions of Congress. b. called countercyclical policy. c. part of automatic stabilization. d. called fiscal policy. e. called monetary policy.

Answer 1

Answer:

The correct answer is (E)

Explanation:

There are two major policies which can directly affect the economy of a country; fiscal policy and monetary policy. Monetary policy is generally controlled by federal or state bank which is used to increase or decrease the overall money supply in the economy. Some important tools of monetary policy are interest rate, discount rate and open market operations etc. The monetary policy is often used to target inflation