The main purpose of expansionary monetary policy is to
A)expand Treasury borrowing.
B)increase reserve requirements.
C)insure deposits.
D)reduce interest rates.

Question

Quizplus · Accepted Answer

The main purpose of expansionary monetary policy is to reduce interest rates, which in turn stimulates borrowing and spending in the economy. This is often done by increasing the money supply or lowering interest rates directly through actions such as decreasing the discount rate, buying government securities, or lowering reserve requirements. The goal is typically to stimulate economic growth and reduce unemployment during a recession or slow period. However, this policy can also lead to inflation if not managed carefully.

The Main Purpose of Expansionary Monetary Policy Is to