Which of the following is an example of an expansionary monetary policy?
A)A reduction in government purchases of goods and services
B)An increase in the discount rate
C)An open market sale of U.S.government securities
D)A reduction in the required reserve ratio
E)A tax cut

Question

Quizplus · Accepted Answer

A reduction in the required reserve ratio would increase the money supply, making it easier for people to borrow and spend, which is an example of an expansionary monetary policy.

Note: Options A, B, and C are examples of contractionary monetary policies as they would decrease the money supply by reducing government spending, increasing the discount rate, and selling government securities, respectively. Option E is a fiscal policy, not a monetary policy.

Which of the Following Is an Example of an Expansionary