Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
By lowering interest rates to boost borrowing and spending
B
By raising interest rates to control inflation
C
By increasing taxes to reduce public debt
D
By decreasing government spending to stabilize the economy
Understanding the Answer
Let's break down why this is correct
Answer
Expansionary monetary policy is a way for a country's central bank to help the economy grow, especially during a recession when many people might be out of work or businesses are struggling. The central bank does this by lowering interest rates, which makes it cheaper for people and businesses to borrow money. When borrowing is easier, more people will take loans to buy homes or cars, and businesses will invest in new equipment or hire more workers. For example, if a small business can borrow money at a lower interest rate, it might decide to expand its operations, creating more jobs. Overall, by encouraging spending and investment, expansionary monetary policy aims to boost economic activity and help the economy recover from a recession.
Detailed Explanation
Lowering interest rates makes it cheaper to borrow money. Other options are incorrect because Some think raising interest rates helps control prices; Increasing taxes might seem like a way to manage debt.
Key Concepts
Expansionary Monetary Policy
Aggregate Demand
Economic Recession
Topic
Expansionary Monetary Policy
Difficulty
easy level question
Cognitive Level
understand
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