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8 February, 17:56

What are the goals when a government uses expansionary monetary policy?

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  1. 8 February, 20:48
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    stimulating economic growth

    Explanation:

    Expansionary monetary policies are the action by the Fed that aims at stimulating economic growth. They aim at increasing the money supply in the economy. Examples of expansionary monetary policies are open market purchases, reduction of the discount rate, and reduction in the reserve requirement ratio.

    Expansionary monetary policies stimulate economic growth by encouraging investments and consumption spending. When the discount rate is reduced, interest rates reduce automatically. Banks will loan out more when they a lot of money in their custody. Expansionary monetary policies are applied when there is a slowdown in economic growth.
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