Question

What is monetary policy? A.Monetary policy is policy set by the central bank to influence the amount of money and credit available in the economy B.Monetary policy is policy set by the government to influence the amount of money and credit available in the economy C.Monetary policy is policy set by the government spending and tax policies D.Monetary policy is policy set by the central bank to influence government spending and tax policies

Answer 1

Monetary policy is policy set by the government to influence the amount of money and credit available in the economy

The Fed Reserve Bank controls interest rates and inflation rates to help encourage spending or borrowing and saving. Usually they will lower interest rates if they want to encourage spending and they will raise them if they want people to save more.