Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Increased unemployment
B
Asset bubbles
C
Decreased consumer spending
D
Deflation
Understanding the Answer
Let's break down why this is correct
Answer
Expansionary monetary policy involves lowering interest rates and increasing the money supply to stimulate economic growth. While this can help boost spending and investment, a potential negative consequence is inflation. When too much money is in circulation, prices for goods and services can rise quickly, making it more expensive for people to buy what they need. For example, if a government lowers interest rates too much, people might borrow a lot of money, leading to increased demand for products, which can drive prices up. If inflation gets out of control, it can create uncertainty in the economy, making it hard for businesses and consumers to plan for the future.
Detailed Explanation
When the government increases money supply, people have more cash to spend. Other options are incorrect because Some might think that more money means less jobs; It's easy to think that more money means less spending.
Key Concepts
asset bubbles
Topic
Expansionary Monetary Policy
Difficulty
easy level question
Cognitive Level
understand
Ready to Master More Topics?
Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.