Monetary policy refers to the actions taken by the government to control the money supply.Question 2Answera.TRUEb.FALSE

The statement provided is often a point of confusion. Monetary policy typically refers to the actions undertaken by a nation's central bank to manage the money supply and interest rates in an economy. This is distinct from government actions, as it is primarily the central bank (like the Federal Reserve in the United States) that conducts monetary policy interventions, rather than the government itself directly managing the money supply.

1. Define Monetary Policy: Monetary policy is the procedure by which a central bank manages the money supply, interest rates, and inflation to achieve macroeconomic objectives.

2. Distinguish between Central Bank and Government: While the government may influence monetary policy indirectly through fiscal policy, it is the central bank that implements monetary policy.

3. Interpretation of the Statement: The assertion, "Monetary policy refers to the actions taken by the government to control the money supply," is misleading because it attributes monetary policy directly to government actions rather than the central bank's role.

Final Answer

The correct answer to the question is b. FALSE. Monetary policy is primarily conducted by a central bank, not the government directly.