Expansionary monetary policy enacted during a recession will cause the inflation rate to increase.

Question

Quizplus · Accepted Answer

Expansionary monetary policy, such as increasing the money supply or lowering interest rates, is designed to stimulate economic growth and reduce unemployment during a recession. However, increasing the money supply can also lead to an increase in aggregate demand, which can result in higher prices and inflation. Therefore, enacting expansionary monetary policy during a recession can cause the inflation rate to rise.

Expansionary Monetary Policy Enacted During a Recession Will Cause the Inflation