Which of the following actions would be considered loosening monetary policy?(1 point)

Question

Responses

The Federal Reserve lowering the reserve requirement
The Federal Reserve lowering the reserve requirement

The Federal Reserve increasing interest rates
The Federal Reserve increasing interest rates

Congress lowering taxes
Congress lowering taxes

Congress increasing government spending

Answer 1

The action that would be considered loosening monetary policy is:

The Federal Reserve lowering the reserve requirement.

Lowering the reserve requirement allows banks to lend more of their deposits, which increases the money supply and stimulates economic activity.

In contrast, increasing interest rates is a tightening of monetary policy, while Congress lowering taxes and increasing government spending are fiscal policy actions, not monetary policy actions.