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Which of the following is NOT consistent with tightening of monetary policy? A. A central bank...

Which of the following is NOT consistent with tightening of monetary policy? A. A central bank sells more government securities to banks. B. The country’s foreign currency may increase in value. C. Interest rates fall. D. Bank lending is reduced. E. Open-market operations may reduce banks’ supplies of funds and liquidity in a financial system.

Monetary policy is preferred to fiscal policy as a _______ policy instrument because it can be adjusted more _________ than fiscal policy. A. short-term, quickly. B. short-term, slowly. C. long-term, quickly. D. long-term, slowly. E. Cannot tell from the information.

Short-term interest rates tend to be more volatile than long-term interest rates. (true or false)

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Answer #1

1.
C. Interest rates fall.

2.
Monetary policy is preferred to fiscal policy as a short term policy instrument because it can be adjusted more quickly than fiscal policy

3.
True

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