Which of the following economic policy measures has 'Interest Rate Policy' as a component?

Options :
  1. Fiscal Policy
  2. Monetary Policy
  3. Trade Policy
  4. Direct Control

Answer and Explanation :-

Answer: Option 2


Interest rate policy is a component of Monetary policy. Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment. Monetary economics provides insight into how to craft optimal monetary policy. The contraction of the monetary supply can be achieved indirectly by increasing the nominal interest rates. Monetary authorities in different nations have differing levels of control of economy-wide interest rates based on its own interest rate policy.

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