The central bank announces that it expects inflation to be relatively low while unemployment rises in the following months. What would be an expected monetary policy action as a result of this forecast?  a. Increase government spending. b. Decrease the discount rate. c. Increase the reserve ration. d. Sell bonds on the open market. e. Decrease marginal income tax rates.

Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter14: Modern Macroeconomics And Monetary Policy
Section: Chapter Questions
Problem 9CQ
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The central bank announces that it expects inflation to be relatively low while unemployment rises in the following months. What would be an expected monetary policy action as a result of this forecast

a. Increase government spending.

b. Decrease the discount rate.

c. Increase the reserve ration.

d. Sell bonds on the open market.

e. Decrease marginal income tax rates. 

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