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Question & Answer
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Weeds
Soil nutrients
Flower growth
Garden pests
Understanding the Answer
Let's break down why this is correct
Expansionary policy lowers interest rates, like a gardener adding nutrients, so more money flows in, businesses spend more, and the economy grows. Other options are incorrect because Weeds stop plants from growing; Soil nutrients help plants, but the policy itself is the action that boosts demand, not just a nutrient.
Key Concepts
Expansionary Monetary Policy Effects
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Deep Dive: Expansionary Monetary Policy Effects
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Definition
Expansionary monetary policy involves the central bank reducing interest rates to stimulate aggregate demand, leading to increased output and decreased unemployment. This policy aims to address cyclical unemployment and boost real income in the short run.
Topic Definition
Expansionary monetary policy involves the central bank reducing interest rates to stimulate aggregate demand, leading to increased output and decreased unemployment. This policy aims to address cyclical unemployment and boost real income in the short run.
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