A government decides to cut the rate of interest in order to stimulate aggregate demand and increase employment. Why might this policy not work in a recession?
A.
Business confidence is low.
B.
It leads to deflation.
C.
It leads to an appreciation in the exchange rate.
D.
It leads to a decrease in the money supply.
Exam No：9708_w24_qp_33 Year：2024 Question No：18
Answer:
A
Knowledge points:
5.3.1 definition of monetary policy
5.3.2 tools of monetary policy: interest rates, money supply and credit regulations
Solution:
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