Monetary policy influences the economy by adjusting the:A.money supply.B.unemployment rate.C.budget deficit.D.gross domestic product.

Monetary policy influences the economy by adjusting the:

A. Money supply.

Monetary policy is the process by which the monetary authority of a country (like the central bank) controls the supply of money, often targeting an inflation rate or interest rate to ensure price stability and general trust in the currency. By increasing or decreasing the money supply, the central bank influences interest rates, investment, consumption, inflation, and unemployment.

B. Unemployment rate, C. Budget deficit, and D. Gross domestic product are influenced indirectly by monetary policy. For example, by increasing the money supply and lowering interest rates, monetary policy can stimulate economic activity and reduce unemployment. Conversely, by decreasing the money supply and raising interest rates, it can slow down the economy and increase unemployment. However, the primary tool of monetary policy is the control of the money supply, not direct control of these other variables.