Question

If the economy is in recession with high unemployment and output below potential GDP, then __________________ would cause the economy to return to its potential GDP
A. A tight monetary policy
B. Fewer loanable funds
C. A loose monetary polity
D. Higher interest rates

Answer 1

Answer:

option c is the correct answer: loose monetary policy

Explanation:

option c is the correct answer: loose monetary policy

monetary policy is refer to that policy in economic system of state which describe the supply and distribution of money  by government. Therefore if loose monetary policy applied then it should easy accessible to all people and directly boost the economy.

Loose monetary policy refer to the cutting of high interest rate which benefit to all people.

Answer 2

Economy a times often experience recession. If the economy is in recession with high unemployment and output below potential GDP, then a loose monetary policy.

• A recession is known to be a phase of a business cycle that is often characterized by low Gross Domestic Product and high levels of unemployment.

In recession, the governments often deploy both fiscal and monetary policies. Monetary policy is a combination of tools that a nation's central bank makes available to promote sustainable economic growth .

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