An expansionary monetary policy that successfully counteracts a recession has the side effect of
A)lower investment spending than if no action had been taken.
B)a larger government deficit than if no action had been taken.
C)a higher price level than if no action had been taken.
D)lower output than if no action had been taken.

Question

Quizplus · Accepted Answer

An expansionary monetary policy involves increasing the money supply and lowering interest rates to stimulate economic growth and increase aggregate demand. One side effect of this policy is a potential increase in the general price level due to the increased demand for goods and services. This increase in prices can result in inflation, which may have negative impacts on the economy in the long run.

An Expansionary Monetary Policy That Successfully Counteracts a Recession Has