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Chartered Financial Analyst Level 1

Chartered Financial Analyst Level 1

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Which of the following economic policies is most likely aimed at influencing the quantity of credit in an economy?

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Explanation:

Explanation:

  • Option A (Incorrect): Fiscal policy involves government decisions regarding taxation and public spending. While it impacts aggregate demand, it does not directly influence the quantity of credit in an economy.

  • Option B (Correct): Monetary policy, managed by the central bank, is specifically designed to regulate the money supply and credit availability in the economy. Tools such as open market operations, reserve requirements, and interest rate adjustments are used to achieve this.

  • Option C (Incorrect): While monetary policy directly affects credit quantity, fiscal policy does not. Therefore, combining both does not align with the question's focus on credit influence.

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