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Question about Monetary Policy

Economics

Originais Teachy

Monetary Policy

Easy

(Originais Teachy 2023) - Question Easy of Economics

During a period of severe economic recession, the government is faced with high unemployment rates and low consumer spending. As the central bank of the country, what monetary policy strategies can be employed to stimulate economic growth and stabilize the economy?
a.
The central bank can employ several monetary policy strategies to stimulate economic growth and stabilize the economy during a severe economic recession. These strategies include lowering interest rates, engaging in quantitative easing, reducing reserve requirements for commercial banks, using forward guidance to influence expectations, and monitoring and adjusting the policies as necessary.
b.
The central bank should increase interest rates, engage in quantitative tightening, increase reserve requirements for commercial banks, and use forward guidance to discourage spending.
c.
The central bank should avoid any intervention, allowing the market to self-correct and stabilize naturally.
d.
The central bank should increase taxes and cut government spending to balance the budget and restore confidence in the economy.
e.
The central bank should print more money without any strategic planning to increase the money supply and stimulate spending.

Answer:

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