When the Federal Reserve increases excess reserves to reduce interest rates and stimulate spending, it is said to engage in:
A) tight money policy.
B) expansionary fiscal policy.
C) expansionary monetary policy.
D) restrictive policy.

Question

Quizplus · Accepted Answer

The Federal Reserve engages in expansionary monetary policy when it increases excess reserves to lower interest rates and stimulate spending.

When the Federal Reserve Increases Excess Reserves to Reduce Interest