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 increasing government spending
Congress increasing government spending

Congress lowering taxes

Answer 1

The action that would be considered loosening monetary policy is:

The Federal Reserve lowering the reserve requirement.

Loosening monetary policy generally involves taking actions that increase the money supply and decrease interest rates, making borrowing cheaper to stimulate economic activity. Lowering the reserve requirement allows banks to lend more of their deposits, thereby increasing the money supply.

Increasing interest rates would tighten monetary policy, while both increasing government spending and lowering taxes are fiscal policy actions rather than monetary policy actions.