When the Central Bank (BSP) increases interest rates, it is implementing ____ policySelect one:a. Monetaryb. Interest Ratesc. Taxesd. Fiscal
Question
When the Central Bank (BSP) increases interest rates, it is implementing ____ policySelect one:a. Monetaryb. Interest Ratesc. Taxesd. Fiscal
Solution
The answer is a. Monetary. When the Central Bank (BSP) increases interest rates, it is implementing a monetary policy. Monetary policy is the process by which the monetary authority of a country (like a central bank) controls the supply of money, often targeting an inflation rate or interest rate to ensure price stability and general trust in the currency.
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