What Is the Relationship Between Monetary Policy and Interest Rates

question 58

Multiple Choice

What is the relationship between monetary policy and interest rates?

• A)Expansionary monetary policy will always result in an increase in interest rates.
• B)Restrictive monetary policy will tend to push interest rates up,unless people expect deflation to occur,in which case interest rates will decline to low levels.
• C)Expansionary monetary policy will tend to push interest rates up,unless people expect inflation to occur,in which case interest rates will remain low.
• D)Restrictive monetary policy will always result in a decrease in interest rates.

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Definitions:

Statue

A three-dimensional sculpture.

Kente Cloth

A type of silk and cotton fabric made of interwoven cloth strips and is native to the Akan ethnic group of South Ghana, known for its vibrant colors and designs.

Material

A substance or substances from which a thing is or can be made.

Kente Cloth

A traditional Ghanaian textile made of interwoven cloth strips, highly symbolic and often worn for special occasions with specific meanings tied to its colors and patterns.