An expansionary monetary policy may be less effective than a restrictive monetary policy because
A)the Federal Reserve Banks are always willing to make loans to commercial banks that are short of reserves.
B)fiscal policy always works at cross purposes with an expansionary monetary policy.
C)changes in exchange rates complicate an expansionary monetary policy more than they do a restrictive monetary policy.
D)commercial banks may not be able to find good loan customers.

Question

Quizplus · Accepted Answer

An expansionary monetary policy aims to increase the money supply and encourage lending, but if commercial banks cannot find creditworthy borrowers, the policy may not effectively stimulate economic activity.

An Expansionary Monetary Policy May Be Less Effective Than a Restrictive