ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -An expansionary monetary policy reduces the cost of borrowing. Therefore, consumers tend to spend more while businesses are encouraged to make larger capital investments.

Detailed explanation-2: -Expansionary monetary policy works by expanding the money supply faster than usual or lowering short-term interest rates.

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 fiscal policy is said to be in action when the government increases the spending and lowers tax rates for boosting economic growth. This increases consumption as there is a rise in purchasing power.

Detailed explanation-5: -The goal of expansionary monetary policy is to grow the economy, particularly in times of economic trouble. The overall aim is to increase consumer and business spending by increasing the money supply through a variety of measures that improve liquidity.