If the Fed pursues expansionary monetary policy then
A)the money supply will decrease,interest rates will rise and GDP will fall.
B)the money supply will decrease,interest rates will fall and GDP will fall.
C)the money supply will increase,interest rates will rise and GDP will rise.
D)the money supply will increase,interest rates will fall and GDP will rise.

Question

Quizplus · Accepted Answer

When the Fed pursues expansionary monetary policy, it aims to increase the money supply in the economy. This is done through measures such as lowering interest rates or increasing the money supply directly. As a result, interest rates will fall, making it cheaper for individuals and businesses to borrow money, which will increase spending and investment. This increased spending and investment will lead to a rise in GDP. Therefore, the correct answer is (D) - the money supply will increase, interest rates will fall, and GDP will rise.

If the Fed Pursues Expansionary Monetary Policy Then