Question

The main goal of monetary policy is to shift:____.a. long-run aggregate supply.b. aggregate demand. c. short-run aggregate supply.

Answer 1

b. aggregate demand.

Step-by-step explanation:

Monetary policy are policies taken by the central bank of a country to shift aggregate demand.

There are two types of monetary policy :

Expansionary monetary policy : these are polices taken in order to increase money supply. When money supply increases, aggregate demand increases. reducing interest rate and open market purchase are ways of carrying out expansionary monetary policy

Contractionary monetary policy : these are policies taken to reduce money supply. When money supply decreases, aggregate demand falls. Increasing interest rate and open market sales are ways of carrying out contractionary monetary policy