What happens to aggregate expenditure and demand as a result of expansionary monetary policy?
A) Aggregate expenditure increases, and aggregate demand increases.
B) Aggregate expenditure decreases, and aggregate demand decreases.
C) Aggregate expenditure increases, and aggregate demand decreases.
D) Aggregate expenditure decreases, and aggregate demand increases.

Question

What happens to aggregate expenditure and demand as a result of expansionary monetary policy?  
A) Aggregate expenditure increases, and aggregate demand increases. 
B) Aggregate expenditure decreases, and aggregate demand decreases. 
C) Aggregate expenditure increases, and aggregate demand decreases. 
D) Aggregate expenditure decreases, and aggregate demand increases.

Quizplus · Accepted Answer

Expansionary monetary policy aims to increase the money supply and lower interest rates, which leads to increased borrowing and spending by firms and households. This results in an increase in aggregate expenditure and an increase in aggregate demand.

What Happens to Aggregate Expenditure and Demand as a Result