Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
To increase interest rates
B
To decrease the money supply
C
To lower interest rates and increase money supply
D
To impose stricter lending regulations
Understanding the Answer
Let's break down why this is correct
Answer
The primary role of central banks in implementing expansionary monetary policy is to increase the money supply and lower interest rates to stimulate economic growth. When the economy is slowing down, central banks can lower interest rates, making it cheaper for people and businesses to borrow money. This encourages spending and investment, which can help boost economic activity. For example, if a central bank reduces interest rates, a business might decide to take a loan to expand its operations, leading to more jobs and production. Overall, the goal is to make money more accessible, encouraging people to spend and invest, which helps the economy recover and grow.
Detailed Explanation
Central banks lower interest rates to make borrowing cheaper. Other options are incorrect because Some might think that increasing interest rates helps the economy; It's a common mistake to think that decreasing the money supply helps.
Key Concepts
central banks
Topic
Expansionary Monetary Policy
Difficulty
easy level question
Cognitive Level
understand
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