The expected effects of monetary expansion are
A)lower real interest rates.
B)exchange rate depreciation.
C)higher inflation.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

Monetary expansion leads to an increase in money supply and a decrease in real interest rates. This can lead to exchange rate depreciation as investors move their money to other currencies with higher interest rates. Additionally, the increase in money supply can lead to higher inflation as there is more money chasing the same goods and services, causing prices to rise. Therefore, all of the above are expected effects of monetary expansion.

The Expected Effects of Monetary Expansion Are