Countercyclical Policies May Be Used Even in Expansions to Slow

question 41

True/False

Countercyclical policies may be used even in expansions to slow down the growth rate of real GDP.

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Definitions:

Reserve Requirement

The reserve requirement is a central banking regulation that sets the minimum amount of reserves that must be held by a commercial bank, not to be loaned out, to ensure bank liquidity and stability.

Open Market Sale

The sale of government bonds by the central bank to reduce the money supply in the economy.

Money Supply

The complete sum of available financial resources in an economy, including cash, coins, and the funds available in checking and savings accounts, at a particular instant.

Inflationary Tendencies

The general tendencies or trends towards increasing prices and diminishing purchasing power over time within an economy.