Explain What Types of Policies a Central Bank Can Implement

question 45

Essay

Explain what types of policies a central bank can implement to reduce the interest rate.

---

Definitions:

Extra Inputs

Additional resources or factors of production, such as labor or materials, that are used to increase output or efficiency.

Bottleneck

A point of congestion or blockage in a system, process, or production line that significantly delays or prevents progress.

Fixity of Production

The characteristic of production processes where inputs and outputs are fixed in the short term, allowing little flexibility.

Average Costs

is the total costs divided by the quantity produced, used to determine the cost of producing one unit of goods or services.