A change in monetary policy that aims to expand aggregate demand can be described either as:
A) increasing the money supply or as raising the interest rate
B) decreasing the money supply or as raising the interest rate
C) decreasing the money supply or as lowering the interest rate
D) increasing the money supply or as lowering the interest rate

Question

Quizplus · Accepted Answer

Increasing the money supply or lowering interest rates can lead to an expansion of aggregate demand. This is known as expansionary monetary policy. Decreasing the money supply or raising interest rates would have the opposite effect, causing a contraction in aggregate demand. Therefore, options A, B, and C are incorrect.

A Change in Monetary Policy That Aims to Expand Aggregate