Question

Which statement does not describe central bank monetary policy action? Central bank action should be humble because of the risk that their actions can create as much or more economic instability as they resolve. Monetary policy has little effect in the immediate future. Central bank action should be aggressive because of the risk that their actions can create more economic instability by not acting. The primary effects of monetary policy are felt perhaps 1 to 3 years in the future.

Answer 1

Central bank action should be aggressive because the risk of their actions can create more economic instability by not acting.

Step-by-step explanation:

Monetary policy can be defined as the actions (macroeconomic policies) adopted and undertaken by the central bank of a particular country to control the money supply and interest rates so as to boost or enhance economic growth. The central bank uses monetary policies to manage inflation, economic growth through long-term interest rates and level of unemployment in a country. In order to boost economic growth, monetary policy is used to increase money supply (liquidity) while it is also used to prevent inflation by reducing money supply.

Hence, the statement which does not describe central bank monetary policy action is that; central bank's action should be aggressive because the risk of their actions can create more economic instability by not acting.

This is completely false.