Final answer:
The claim that monetary policy focuses on controlling the money supply and interest rates to curb government expenditures is false; monetary policy aims to stabilize the economy by managing inflation and economic growth, while fiscal policy deals with government spending.
Step-by-step explanation:
The statement that monetary policy focuses on money supply and interest rates to curb government expenditures is false. Monetary policy primarily aims to control the money supply and interest rates to influence the overall economy.
Specifically, an expansionary monetary policy increases the quantity of money and credit to reduce interest rates, thereby boosting aggregate demand and countering recession.
Conversely, a contractionary monetary policy decreases the money supply and credit, raises interest rates to combat inflation, and can slow economic growth. While fiscal policy is the tool used by the government to adjust its spending and tax rates to influence the economy, monetary policy is conducted by central banks like the Federal Reserve in the U.S.
Monetary policy focuses on using money supply and interest rates to regulate the overall economy, not specifically to curb government expenditures.
An expansionary monetary policy aims to stimulate economic growth by increasing the money supply and lowering interest rates, while a contractionary monetary policy aims to control inflation by reducing the money supply and raising interest rates.