To manage macroeconomic stability, the Central Bank increases the statutory reserve ratio for commercial banks and conducts open market operations to sell government bonds. At the same time, the Government announces a reduction in the standard rate of income tax alongside an increase in national welfare payments.
It can be inferred from these actions that:
monetary policy is expansionary whilst fiscal policy is contractionary.
both monetary policy and fiscal policy are contractionary.
monetary policy is contractionary whilst fiscal policy is expansionary.
both monetary policy and fiscal policy are expansionary.
