📚 Learning Guide
Expansionary Monetary Policy Effects
hard

Expansionary monetary policy is to aggregate demand as a gardener is to which of the following?

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Learning Path
Learning Path

Question & Answer
1
Understand Question
2
Review Options
3
Learn Explanation
4
Explore Topic

Choose the Best Answer

A

Weeds

B

Soil nutrients

C

Flower growth

D

Garden pests

Understanding the Answer

Let's break down why this is correct

Answer

Expansionary monetary policy is to aggregate demand what a gardener is to a garden: it nurtures growth. By lowering interest rates and increasing money supply, the policy encourages businesses and households to spend more, just as a gardener waters and feeds plants. Both actions aim to stimulate flourishing—one stimulates the economy, the other stimulates plants. For example, when a bank cuts rates, consumers buy more cars, boosting demand like a gardener pruning a bush to make it flourish. Thus, the policy acts as a caretaker of the economy, just as a gardener cares for a garden.

Detailed Explanation

Expansionary policy lowers interest rates, like a gardener adding nutrients, so more money flows in, businesses spend more, and the economy grows. Other options are incorrect because Weeds stop plants from growing; Soil nutrients help plants, but the policy itself is the action that boosts demand, not just a nutrient.

Key Concepts

Expansionary Monetary Policy
Aggregate Demand
Economic Output
Topic

Expansionary Monetary Policy Effects

Difficulty

hard level question

Cognitive Level

understand

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