The expected effects of a tighter monetary policy are
A)lower real interest rates.
B)exchange rate depreciation.
C)lower inflation.
D)All of these responses are correct.

Question

Quizplus · Accepted Answer

Tighter monetary policy aims to reduce inflation, therefore the expected effect is lower inflation. The other options, lower real interest rates and exchange rate depreciation, would be more typical of a looser monetary policy.

The Expected Effects of a Tighter Monetary Policy Are