Question

Which of the following is an example of a Monetary policy? A. The government passes a tax on companies who emit greenhouse gases into the Atmosphere B. The government gives a tax break to special interest groups who regularly donate large sums to political campaigns. C. The government lowers interest rates to make it cheaper for people and businesses to borrow money. D. The government passes a universal tax credit to stimulate consumer spending during an economic downturn.

Answer 1

The third alternative is correct (C).

The government has two main instruments for monetary policy:

-buying or selling government securities

-manupulate the interest rate

The interest rate can be used to stimulate or discourage economic activity. In times of warming, the government may raise the interest rate so that loans become more expensive and people and businesses slow down borrowing. Conversely, in times of stagnation, government can lower the interest rate, this makes credit cheaper and people and companies borrow more.

Answer 2

Your answer would be, The following example of a Monetary Policy is, Letter Choice, (C), The Government lowers interest rates to make it cheaper for people, and businesses to borrow money.

Hope that helps!!!!! :) (Answer: Letter Choice (C).).