Question

Monetary policy actions by the Fed are Multiple Choice more effective in a restrictive direction than they are in an expansionary direction. more effective in an expansionary direction than they are in a restrictive direction. equally effective in both expansionary and restrictive directions. only effective when coupled with fiscal policy actions.

Answer 1

Answer:

more effective in a restrictive direction than they are in an expansionary direction -

Correct Answer

Explanation:

The Fed is the nation’s monetary policy authority. Monetary policy involves influencing the availability and cost of money and credit to promote a healthy economy. For the Fed, Congress has mandated two policy goals: one, maximum sustainable output and employment; and two, stable prices, meaning low, stable inflation. These dual policy goals imply moderate long-term interest rates.

Answer 2

Answer:

More effective in restrictive direction than expansionary direction

Explanation:

This is because government prefers reduced inflation and lower prices which is favourable to consumers though it might cause reduction in GDP but the economy is more predictable using constrictive money policy.