Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose 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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