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) Each of these answers is correct.

Question

Quizplus · Accepted Answer

Even if the central bank implements expansionary monetary policy by injecting funds into the banking system, banks may still be unwilling to lend due to perceived risks or a lack of demand from borrowers. This can limit the effectiveness of the policy and potentially lead to an economic downturn.

A Potential Problem with Expansionary Monetary Policy Is That Banks