Expansionary monetary policy refers to the ________ to increase real GDP.
A)government's increasing spending and lowering taxes
B)government's decreasing spending and raising taxes
C)Federal Reserve's increasing the money supply and decreasing interest rates
D)Federal Reserve's decreasing the money supply and increasing interest rates

Question

Quizplus · Accepted Answer

Expansionary monetary policy involves the Federal Reserve increasing the money supply through measures such as buying government securities or reducing the reserve requirement for banks. This leads to a decrease in interest rates, which encourages borrowing and spending, ultimately increasing real GDP. Option A refers to expansionary fiscal policy, while options B and D describe contractionary policies that would decrease real GDP.

Expansionary Monetary Policy Refers to the ________ to Increase Real