Expansionary monetary policy to prevent real GDP from falling below potential real GDP would cause the inflation rate to be ________ and real GDP to be ________.
A)higher; higher
B)higher; lower
C)lower; higher
D)lower; lower

Question

Quizplus · Accepted Answer

Expansionary monetary policy, which involves lowering interest rates or increasing the money supply, is used to stimulate economic growth. This typically results in higher inflation due to increased spending and demand, and higher real GDP as economic activity expands.

Expansionary Monetary Policy to Prevent Real GDP from Falling Below