What term describes a monetary policy stance that prioritizes lowering interest rates to stimulate growth?

• A. Hawkish
• B. Neutral
• C. Dovish
• D. Aggressive

Answer: (C)

Dovish monetary policy aims to stimulate growth by lowering interest rates and keeping monetary conditions accommodative. Lower borrowing costs encourage households to spend and businesses to invest, which boosts aggregate demand, supports hiring, and helps the economy expand. This stance prioritizes growth and employment, even if it allows a bit more inflation risk in the short term. Hawkish policy, in contrast, would push rates higher or keep them tight to curb inflation, which can slow growth. Neutral sits in the middle, reacting to data without a built-in bias toward easing or tightening. Aggressive is not a standard label for a stance, though it might describe rapid easing; the conventional term for the described approach is dovish.