Home › CIBN Banking Exams › Economics › Monetary Policy › An economy in recession with output below potent…
An economy in recession with output below potential GDP calls for policy that is:
AExclusionary
BExploratory
CExpansionary
DExplanatory
Answer & Solution
Correct answer: C. Expansionary
1. Unemployment is high and demand is weak.
2. Cheaper credit can lift spending back up.
3. So expansionary policy is called for.
_Source: OpenStax Principles of Economics 3e, Chapter 28, Monetary Policy and Bank Regulation._
Related questions
In March 2020 the Fed responded to the pandemic recession by reducing the federal funds:In the 1987 stock market crash, share values fell in a single day by about:Unlike most central banks, the Federal Reserve is described in structure as:Beyond policy, the central bank makes sure enough coins and notes circulate, meeting publiBesides open market operations, the Fed can change the discount rate and the reserve:Policy that raises interest rates and reduces borrowing is described as:Policy that lowers interest rates and stimulates borrowing is described as:Decisions about open market operations are made by the Federal Open Market: