Practice Questions
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How does expansionary monetary policy primarily impact the liquidity in the economy?
Expansionary monetary policy lowers interest rates. Other options are incorrect because This answer suggests that raising interest rates decreases liq...
How does expansionary monetary policy typically impact inflation rates in an economy?
Expansionary monetary policy means the government increases the money supply. Other options are incorrect because Some might think that reducing the m...
How does an expansionary fiscal policy, characterized by increased budget deficits, generally influence investment in an economy?
When the government spends more money, it can lower interest rates. Other options are incorrect because Some might think that higher government spendi...
How does a reduction in interest rates typically affect business investment and economic growth during an expansionary policy phase?
When interest rates go down, borrowing money becomes cheaper for businesses. Other options are incorrect because Some might think lower interest rates...
How does an expansionary monetary policy influence business investment in an inflationary environment?
Expansionary monetary policy lowers interest rates. Other options are incorrect because Some might think that higher costs from inflation mean busines...
What is the primary goal of an expansionary monetary policy?
The main aim is to boost spending and investment. Other options are incorrect because Some might think this policy aims to lower prices; It's a common...
What is the primary goal of an expansionary fiscal policy?
The main aim of expansionary fiscal policy is to lower unemployment. Other options are incorrect because Some might think that increasing taxes helps ...
Which of the following describes a likely effect of an expansionary policy on interest rates?
When the government uses expansionary policy, it often lowers interest rates. Other options are incorrect because Some might think interest rates stay...
Expansionary policy is to economic stimulation as lowering interest rates is to what?
When interest rates go down, it costs less to borrow money. Other options are incorrect because Some think lower interest rates always lead to higher ...
During a recession, policymakers often implement __________ to stimulate economic growth by encouraging borrowing and investment.
Expansionary policy helps the economy grow by making it easier for people and businesses to borrow money. Other options are incorrect because Some mig...
Which of the following actions can policymakers take during a recession to effectively implement expansionary policy and encourage investment? Select all that apply.
None of the actions listed will help encourage investment during a recession. Other options are incorrect because Lowering interest rates is usually a...
During a mild recession, policymakers decide to lower interest rates to encourage borrowing and investment. What is the primary reason for this action?
When interest rates go down, it costs less to borrow money. Other options are incorrect because Some might think lower rates cause prices to rise quic...
During a mild recession, the government decides to implement an expansionary policy to stimulate the economy. Which of the following actions would most effectively encourage businesses to invest and, in turn, reduce unemployment?
Lowering interest rates makes it cheaper for businesses to borrow money. Other options are incorrect because Increasing taxes on businesses can make t...
Arrange the following steps in the correct order for implementing an expansionary policy to stimulate investment during a recession: A) Decrease interest rates, B) Increase consumer spending, C) Encourage borrowing, D) Improve economic activity.
First, we lower interest rates. Other options are incorrect because This suggests we should encourage borrowing first; This order puts increasing spen...
During a mild recession, which expansionary policy would most effectively encourage investment and reduce unemployment?
Lowering interest rates makes it cheaper for people and businesses to borrow money. Other options are incorrect because Some might think that increasi...
In a mild recession, which expansionary policy is most likely to effectively stimulate investment and reduce unemployment?
When interest rates are lower, it costs less to borrow money. Other options are incorrect because Some think higher taxes help the government, but the...
During a mild recession, policymakers can implement various expansionary measures. Which of the following actions best exemplifies a direct strategy to increase investment and reduce unemployment?
Lowering interest rates makes it cheaper for people and businesses to borrow money. Other options are incorrect because Increasing taxes takes money a...
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