In early 2021, an article on bloomberg.com noted that "India's consumer price inflation cooled to a 15-month low in Dece

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In Early 2021 An Article On Bloomberg Com Noted That India S Consumer Price Inflation Cooled To A 15 Month Low In Dece 1 (91.44 KiB) Viewed 12 times

In early 2021, an article on bloomberg.com noted that "India's consumer price inflation cooled to a 15-month low in December, boosting the case for the central bank to resume interest rate cuts to support the economy." Source: Vrishti Beniwal, "India's Inflation Slows to 15-Month Low Before RBI Rate Decision," bloomberg.com, January 12, 2021. a. How would the central bank of India cutting interest rates "support the economy"? O A. The contractionay monetary policy of cutting interest rates should result decreases in other interest rates and increase GDP. O B. The expansionary monetary policy of cutting interest rates should result in decreases in other interest rates and decrease GDP. OC. The expansionary monetary policy of cutting interest rates should result in decreases in other interest rates and increase GDP. ⒸD. The contractionay monetary policy of cutting interest rates should result in decreases in other interest rates and decrease GDP. b. Why would the fact that inflation was slowing be a good time for the central bank of India to cut interest rates? O A. Cutting interest rates when inflation was decreasing would push inflation higher and harm the economy. OB. There is some flexibility to engage in expansionary monetary policy without pushing inflation out of control. OC. There is some flexibility to engage in contractionary monetary policy without pushing inflation out of control. O D. This would decrease consumption, investment, and net exports, thereby decreasing aggregate demand and real GDP. c. What response to its rate cut was the Bank of India hoping see? O A. Economic contraction via consumption decreasing more than investment spending increases. OB. Economic growth via increased consumption and increased investment spending. O C. Economic contraction via decreased consumption and decreased investment spending. O D. Economic growth via consumption increasing more than investment spending decreases.