Monetary policy is designed to affect the level of economic activity by:
A) controlling imports and exports.
B) controlling government taxes and expenditures.
C) influencing the leakages and injections that flow through the economy's financial institutions.
D) government monitoring of economic conditions to advise businesses how to produce.

Question

Quizplus · Accepted Answer

Monetary policy involves managing the supply of money and interest rates by central banks to influence economic activity. It affects how much money flows through the economy's financial institutions, impacting investments (injections) and savings (leakages), thereby influencing overall economic activity.

Monetary Policy Is Designed to Affect the Level of Economic