Question

Active monetary policy

a. is when central banks purposefully choose to only stabilize money and price levels through monetary policy.
b. has a real effect on the economy in the long run.
c. is when central banks take orders from the ruling party on how to conduct monetary policy.
d. is the strategic use of monetary policy to counteract macroeconomic expansions and contractions.
e. is when central banks only use fiscal policy to try to influence the economy.

Answer 1

Active monetary policy

d. is the strategic use of monetary policy to counteract macroeconomic expansions and contractions.

Step-by-step explanation:

• The option a is not correct as when central banks purposefully choose to only stabilize money and prices levels through monetary policy, then this policy is called as passive monetary policy.
• The option b is not correct as it has effect on the economy but not in long run.
• The option c is not correct as when central banks take orders from the ruling party on how to conduct monetary policy then it is not an active monetary policy.
• The option e is not correct as when central bank use only fiscal policy to try to influence the economy can or can't be active monetary policy.
• The option d is correct as the active monetary policy is used to counter the changing economic conditions.