Question

Identify the goals of the central bank when creating monetary policy. Check all that apply.

Answer 1

The answer on E2020 is-

B,D,E

Answer 2

Answer:

-influencing the business cycle

-encouraging economic growth

-avoiding periods of time where little credit is available

Explanation:

Monetary Policy is the instrument by which the Central Bank conducts the economy. In low growth situations, the Central Bank pursues an expansionary monetary policy, improving credit conditions to stimulate the economy. In times of overheating, the Central Bank makes a restrictive monetary policy, manipulating available credit in order to cool economic activity. That is, we can say that the Central Bank acts to influence the economic cycle and stimulate economic growth in a sustainable way. This is done through monetary policy, which consists of increasing / decreasing the interest rate, increasing / decreasing the percentage of compulsory deposits of banks and through open marke operations.