Question

Stimulating or restricting the economy with the use of interest rates is known as the: A....

Stimulating or restricting the economy with the use of interest rates is known as the:

A.

monetary policy
B.

fiscal policy
C.

foreign policy
D.

investment policy
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Homework Answers

Answer #1

The right answer is

(A) monetary policy

Explanation :-

Monetary policy is the policy that uses interest rate to stimulate or restrict the economy . Monetary policy can reduce interest rate so as to increase borrowing in the market or can increase interest rate to reduce the level of borrowing in the market.

So, monetary policy uses interest rate to stimulate or restrict the economy.

Explanation for rejection of other points :-

Fiscal policy is the policy which states how to stimulate economy using government revenue collection for expenditure or spending .

Investment policy is the policy related to investment inand foreign policy is the policy how to deal with other nations.

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