Question

Most Keynesians believe that monetary policy is best used to control __________. Group of answer choices...

Most Keynesians believe that monetary policy is best used to control __________.

Group of answer choices

balance of payments

interest rates

minimum wages

the federal budget

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Answer #1

Most Keynesians believe that the monetary policy is used best to control interest rates. This is because the Central Bank alters the money supply to control the interest rates or to target the interest rates. Increase in money supply will lead to decrease in interest rates and a decrease in money supply would lead to to an increase in interest rates. The central bank uses monetary policy to increase or decrease the interest rates to manage aggregate demand.

Monetary policy is not used to control minimum wages aur Federal budget. Moreover monetary policy cannot be used to control Balance of payments in all situations.

Therefore according to Keynesians, monetary policy is best used to control interest rates.

Hence second option is correct.

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