Other things equal, an expansionary monetary policy will tend to _____ in the short run.

Question

Quizplus · Accepted Answer

An expansionary monetary policy involves increasing the money supply through measures such as lowering the reserve requirement, buying government securities, or lowering the discount rate. This increase in the money supply tends to lower interest rates, as the demand for credit increases and the supply of credit expands. This stimulates spending, investment, and economic growth in the short run.

Other Things Equal, an Expansionary Monetary Policy Will Tend to _____