An expansionary monetary policy is more effective in combating recession when the public's demand for money does not decrease.

Question

Quizplus · Accepted Answer

Expansionary monetary policy, which involves lowering interest rates and increasing the money supply, is more effective in stimulating economic activity during a recession when the public's demand for money remains stable or increases. If the demand for money does not decrease, it means that people and businesses are more likely to borrow and spend the additional money, thereby boosting economic activity.

An Expansionary Monetary Policy Is More Effective in Combating Recession