An expansionary monetary policy may be less effective than a restrictive monetary policy because:
A)the Bank of Canada is always willing to make loans to chartered banks that are short of reserves.
B)fiscal policy always works at cross purposes with an expansionary monetary policy.
C)the circularity or feedback problem complicates an expansionary monetary policy more than it does a restrictive monetary policy.
D)chartered banks may not be willing to lend their excess reserves to the customers.

Question

Quizplus · Accepted Answer

Chartered banks may not be willing to lend their excess reserves to customers, which can limit the effectiveness of an expansionary monetary policy.

An Expansionary Monetary Policy May Be Less Effective Than a Restrictive