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Question

Cheap money policy is followed __________.

A
to counter inflation
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B
to reverse depression
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C
to appease the public
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D
to increase disposal income of the households
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Solution

The correct option is C to reverse depression
Cheap money policy refers to a monetary policy by the central bank where the central bank sets low interest rates so that credit is easily available to the general public in order to bring efficiency in trade and commerce in an economy. Such a policy is used by the government at the time of depression in the economy as it increases the money supply in the economy which reverses depression.

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