Question

Lower interest rates are part of tight money policy.

Answer 1

The statement, 'lower interest rates are part of tight money policy' is false.

Explanation:

Tight monetary policy which is also known as contractionary monetary policy is undertaken by Federal Reserve to reduce the economic growth that is overheated and to curb fast increasing inflation rate. Here the policy increases the interest rates thereby reducing the borrowing in the economy.

So, the true statement would be 'lowering the interest rates stimulates the borrowing in the economy and it is a part of the expansionary or loose monetary policy'.