Question

Unconventional monetary policy, followed during and after the financial crisis and recession 2007-present does NOT include which of the following A. expanding open market purchases and the money supply even when short-term interest rates are zero B. lowering bank reserve requirements C. purchase of assets other than government bonds D. providing 'forward guidance' about future short-term interest rates to influence expectations of future long-term interest rates

Answer 1

Answer:

The correct answer is A. expanding open market purchases and the money supply even when short-term interest rates are zero, C. purchase of assets other than government bonds, D. providing 'forward guidance' about future short-term interest rates to influence expectations of future long-term interest rates.

Explanation:

An unconventional monetary policy is one that uses unusual mechanisms to reactivate the economy and maintain economic-financial stability.

Unconventional or non-standard monetary policy are those unusual mechanisms. They are often used in times of deep crisis, when conventional monetary policy is not enough. Initially, the central bank modifies basic parameters such as interest rates. If this has no effect on the economy, then turn to more aggressive policies.

Beyond the objectives of monetary policy in general, unconventional monetary policy pursues its own. Its objectives are:

• Provide or drain liquidity with more powerful mechanisms.
• Maintain the proper functioning of the financial markets.

It is also important that among the unconventional measures, there are modified conventional measures. For example, as an unconventional measure, the central bank can modify the maturities of a conventional monetary policy instrument.