Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
To decrease the money supply
B
To increase employment and economic growth
C
To increase interest rates
D
To reduce inflation
Understanding the Answer
Let's break down why this is correct
Answer
The primary goal of expansionary monetary policy is to stimulate the economy by increasing the money supply and lowering interest rates. When a central bank, like the Federal Reserve, implements this policy, it aims to encourage borrowing and spending by businesses and consumers. For example, if interest rates are lowered, individuals are more likely to take out loans to buy homes or cars, and businesses may invest in new projects. This increased spending helps boost economic growth, especially during times of recession or economic slowdown. Ultimately, the goal is to create more jobs and increase overall economic activity.
Detailed Explanation
The main aim is to boost jobs and help the economy grow. Other options are incorrect because Some might think this policy means less money in the economy; Increasing interest rates can slow down spending.
Key Concepts
money supply
Topic
Expansionary Monetary Policy
Difficulty
easy level question
Cognitive Level
understand
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