The purpose of an expansionary monetary policy is to shift the
A) aggregate demand curve leftward.
B) aggregate demand curve rightward.
C) aggregate supply curve leftward.
D) investment demand curve leftward.

Question

Quizplus · Accepted Answer

An expansionary monetary policy involves an increase in the money supply and lowering of interest rates, which encourages borrowing and spending. This leads to an increase in aggregate demand, therefore shifting the aggregate demand curve to the right (option B). The other options are not correct as they involve shifting the aggregate supply or investment demand curve, which are not affected by monetary policy.

The Purpose of an Expansionary Monetary Policy Is to Shift