Which of the following generally occurs when a central bank pursues expansionary monetary policy?

Question

Quizplus · Accepted Answer

When a central bank pursues expansionary monetary policy, it typically purchases government bonds from banks and other financial institutions. This increases the money supply in the economy and lowers the interest rate, as banks have more funds to lend out at lower rates. Therefore, the correct choice is A - the central bank purchases bonds and the interest rate decreases.

Which of the Following Generally Occurs When a Central Bank