ECONOMICS
MONETARY POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Maximize employment
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raise taxes
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cut debt
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None of the above
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Detailed explanation-1: -Stimulation of economic growth. Increased inflation. Currency devaluation. Decreased unemployment. 06-Dec-2022
Detailed explanation-2: -If the Fed, for example, buys or borrows Treasury bills from commercial banks, the central bank will add cash to the accounts, called reserves, that banks are required keep with it. That expands the money supply.
Detailed explanation-3: -An expansionary monetary policy decreases unemployment as a higher money supply and attractive interest rates stimulate business activities and expansion of the job market.
Detailed explanation-4: -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-5: -The expansionary monetary policy will create an inflationary gap due to a rise in money supply when the economy is fully employed. An increased supply of money in the economy will increase the aggregate demand, and an adverse effect will occur by raising the price of finished output.