4
QuizMultiple Choice

Monetary Policy: The Federal Reserve — Quiz

Question 4 • Economics

Which best describes what a central bank uses monetary policy to do?

Answer
A
ensure that the government has a balanced budget
B
influence financial institutions globally
C
steer the economy away from recession and toward growth
D
ensure that the government is sufficiently funded

Explanation

A central bank uses monetary policy—such as changing interest rates or the money supply—to influence borrowing, spending, and investment in the economy. These tools can help limit downturns and encourage economic growth. Balancing the government’s budget and funding its programs are fiscal responsibilities, not the main purpose of monetary policy.

AI-written and checked against the verified answer.

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