Expansionary monetary policy increases bank reserves and the money supply, also decreases interest rates.

Question

Quizplus · Accepted Answer

Expansionary monetary policy involves actions taken by a central bank to increase the money supply and lower interest rates. This is typically done through measures such as buying government securities from banks, which increases bank reserves and boosts lending. As banks have more money to lend, interest rates decrease, making it more attractive for borrowers to take out loans and stimulating economic growth. Therefore, the statement is true.

Expansionary Monetary Policy Increases Bank Reserves and the Money Supply