ECONOMICS
FISCAL POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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selling bonds
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increase fed fund rate
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decrease discount rate
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increase required reserves
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Detailed explanation-1: -Key Takeaways A central bank, such as the Federal Reserve in the U.S., will use expansionary monetary policy to strengthen an economy. The three key actions by the Fed to expand the economy include a decreased discount rate, buying government securities, and a lowered reserve ratio.
Detailed explanation-2: -Expansionary fiscal policy includes tax cuts, transfer payments, rebates and increased government spending on projects such as infrastructure improvements. For example, it can increase discretionary government spending, infusing the economy with more money through government contracts.
Detailed explanation-3: -Expansionary Monetary Policy Graph Lower interest rates decrease the cost of borrowing money, which encourages consumers to increase spending on goods and services and businesses to invest in new equipment.
Detailed explanation-4: -Expansionary monetary policy is when a central bank uses its tools to stimulate the economy. That increases the money supply, lowers interest rates, and increases demand. It boosts economic growth.