Ralph: +27 68 077 9615
Email:
http://theeconomistsoe.com/
,ECS2602
OCT/NOV 2020
ONLINE QUESTIONS & ANSWERS
, 1. Which of the following statement are correct?
a. Inflation targeting is an example of stabilization policy.
b. The main policy variable of monetary policy is the interest rate.
c. A contractionary monetary policy implies a decrease in the interest rate to bring about an increase in
the money supply.
d. An increase is taxes implies the implementation of an expansionary fiscal policy.
e. An increase in the money supply implies the implementation of an expansionary monetary policy.
f. The main policy variable of monetary policy is the money supply.
1. a and b
2. b, c and d
3. d, e and f
4 Only e and f
4. a and e
Explanation: Monetary policy is the policy adopted by the monetary authority of a country that controls
either the interest rate payable on very short-term borrowing or the money supply, often
targeting inflation or the interest rate to ensure price stability and general trust in the currency.
Expansionary policy occurs when a monetary authority uses its tools to stimulate the economy. The main
variable of MP is money supply. An expansionary policy maintains short-term interest rates at a lower
2
Email:
http://theeconomistsoe.com/
,ECS2602
OCT/NOV 2020
ONLINE QUESTIONS & ANSWERS
, 1. Which of the following statement are correct?
a. Inflation targeting is an example of stabilization policy.
b. The main policy variable of monetary policy is the interest rate.
c. A contractionary monetary policy implies a decrease in the interest rate to bring about an increase in
the money supply.
d. An increase is taxes implies the implementation of an expansionary fiscal policy.
e. An increase in the money supply implies the implementation of an expansionary monetary policy.
f. The main policy variable of monetary policy is the money supply.
1. a and b
2. b, c and d
3. d, e and f
4 Only e and f
4. a and e
Explanation: Monetary policy is the policy adopted by the monetary authority of a country that controls
either the interest rate payable on very short-term borrowing or the money supply, often
targeting inflation or the interest rate to ensure price stability and general trust in the currency.
Expansionary policy occurs when a monetary authority uses its tools to stimulate the economy. The main
variable of MP is money supply. An expansionary policy maintains short-term interest rates at a lower
2
