- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 12. Monetary and Fiscal Policy
- Subject 6. Contractionary and Expansionary Monetary Policies and the Neutral Rate
CFA Practice Question
If a central bank decides to increase interest rates, its monetary policy is said to be ______.
B. expansionary
C. neutral
A. contractionary
B. expansionary
C. neutral
Correct Answer: A
In this case, liquidity will be reduced and the rate of growth of the money supply will be slowed down.
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