📚 Learning Guide
Expansionary Policy and Investment
easy

During a recession, policymakers often implement __________ to stimulate economic growth by encouraging borrowing and investment.

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Learning Path
Learning Path

Question & Answer
1
Understand Question
2
Review Options
3
Learn Explanation
4
Explore Topic

Choose the Best Answer

A

Expansionary Policy

B

Contractionary Policy

C

Fiscal Policy

D

Regulatory Policy

Understanding the Answer

Let's break down why this is correct

Answer

During a recession, policymakers often implement expansionary policies to stimulate economic growth. These policies aim to encourage borrowing and investment by lowering interest rates or increasing government spending. When interest rates are low, it becomes cheaper for people and businesses to borrow money, which can lead to more spending and investment in the economy. For example, if a small business can borrow money at a lower interest rate, it might use that money to buy new equipment or hire more workers, helping to create jobs and boost economic activity. Overall, expansionary policies help to revive the economy by making it easier for people and businesses to invest in their future.

Detailed Explanation

Expansionary policy helps the economy grow by making it easier for people and businesses to borrow money. Other options are incorrect because Some might think contractionary policy helps during tough times, but it actually slows down the economy; Fiscal policy involves government spending and taxes, but it’s not always focused on encouraging borrowing.

Key Concepts

Expansionary Policy
Investment
Economic Growth
Topic

Expansionary Policy and Investment

Difficulty

easy level question

Cognitive Level

understand

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