As a result of an expansionary monetary policy:
A)both aggregate expenditure and aggregate demand increase.
B)both aggregate expenditure and aggregate demand decrease.
C)aggregate expenditure increases and aggregate demand decreases.
D)aggregate expenditure decreases and aggregate demand increases.
E)aggregate expenditure remains unchanged;aggregate demand increases.

Question

Quizplus · Accepted Answer

Expansionary monetary policy increases the money supply and lowers interest rates, which in turn increases household and firm borrowing, leading to increased spending on goods and services. As a result, both aggregate expenditure and aggregate demand increase.

As a Result of an Expansionary Monetary Policy