Which one of the following statements relating to monetary policy is correct?
A reduction in the central bank interest rate will always lead to an increase in real national output.
While aimed at dampening aggregate demand to curb inflation, a rise in interest rates can also cause cost-push inflation.
Quantitative easing is a monetary policy tool designed to decrease liquid reserves in the banking system.
An increase in the policy interest rate has no direct or indirect impact on the exchange rate.
