Expansionary monetary policy refers to the ________ to increase real GDP.
A)government's increasing spending and lowering taxes
B)government's decreasing spending and raising taxes
C)Bank of Canada's increasing the money supply and decreasing interest rates
D)Bank of Canada's decreasing the money supply and increasing interest rates
E)private firms decisions concerning the payment of dividends

Question

Quizplus · Accepted Answer

Expansionary monetary policy refers to the Bank of Canada's action to increase the money supply and lower interest rates to encourage borrowing and spending, thus stimulating economic activity and increasing real GDP. Option A refers to expansionary fiscal policy, which involves the government's increasing spending and lowering taxes to achieve the same goal, and Option B refers to contractionary fiscal policy, which would have the opposite effect. Option D describes a contractionary monetary policy, which would reduce economic growth. Option E is unrelated to monetary policy.

Expansionary Monetary Policy Refers to the ________ to Increase Real