Which of the Following Is Not an Appropriate Policy for a Central

Multiple Choice

Which of the following is not an appropriate policy for a central bank to follow if the economy is plagued with deflation?

A) increasing the target interest rate on overnight loans
B) using expansionary monetary policy to drive down interest rates
C) consistently pursuing policy to promote the credibility of the central bank
D) explicitly and credibly targeting inflation
E) raising the ratio of reserves commercial banks are required to hold