How does expansionary monetary policy primarily impact the liquidity in the economy?

Expansionary monetary policy is a way for a central bank, like the Federal Reserve, to increase the amount of money available in the economy. This usually happens when the bank lowers interest rates or buys government securities, making it cheaper for people and businesses to borrow money. When borrowing is easier, people are more likely to take loans for things like buying homes or starting businesses, which increases spending and investment. For example, if a small business can get a loan at a lower interest rate, it might use that money to hire more employees or buy new equipment. This overall increase in money and spending helps boost economic activity and can lead to more jobs.