A potential problem with expansionary monetary policy is that banks can:
A) be loaned up prior to open-market operations.
B) be unwilling to lend.
C) decide that a recession is best for the economy.
D) choose not to hold any reserves.

Question

Quizplus · Accepted Answer

Even if the central bank attempts to expand the money supply through open-market operations, banks may be reluctant to lend due to factors such as a lack of demand for credit or concerns about borrower creditworthiness. This can limit the effectiveness of expansionary monetary policy.

A Potential Problem with Expansionary Monetary Policy Is That Banks