Expansionary monetary policy will tend to have what effect?

Question

Quizplus · Accepted Answer

Expansionary monetary policy involves increasing the money supply in the economy. This is usually done by the central bank buying government securities, which injects new money into the financial system. When there is an increase in the money supply, interest rates tend to decrease because there is more money available for borrowing. This is because borrowers have more options and lenders have to compete by offering lower interest rates. Therefore, option A is the correct answer.

Expansionary Monetary Policy Will Tend to Have What Effect