Which of the following is NOT a reason that a stimulative monetary policy may be ineffective?
A)The effects of a stimulative policy may be disrupted by expectations of inflation.
B)Retirees who rely on interest income may restrict their spending.
C)Lending institutions may increase their standards for borrowers, so some potential borrowers may not qualify for loans.
D)Higher interest rates caused by the stimulative policy might reduce economic growth.

Question

Quizplus · Accepted Answer

Stimulative monetary policy typically involves lowering interest rates to encourage borrowing and spending, which should, in theory, increase economic growth. Therefore, higher interest rates would not be a result of stimulative policy but rather of a restrictive monetary policy.

Which of the Following Is NOT a Reason That a Stimulative