An expansionary monetary policy will likely:
A)increase the prime interest rate.
B)reduce the overnight lending rate.
C)increase the bank rate.
D)increase the federal budget deficit.

Question

Quizplus · Accepted Answer

An expansionary monetary policy is aimed at increasing the supply of money in the economy, which is typically done by reducing the overnight lending rate. This makes it cheaper for banks to borrow money, which, in turn, allows them to lend more money to businesses and individuals. This increase in lending activity can stimulate economic growth and boost employment levels. Therefore, reducing the overnight lending rate is the most likely action taken during an expansionary monetary policy.

An Expansionary Monetary Policy Will Likely