<u>Expansionary monetary policy</u>:
- Reducing the required reserve ratio.
- Reducing the federal funds rate.
<u>
Contractionary monetary policy</u>:
- Increasing the discount rate
.
<u>Explanation</u>:
<u>Expansionary monetary policy </u>refers to the policy that helps in stimulating the economy particularly in increasing the money supply of the country.
<u>Contractionary monetary policy</u> is just opposite to the expansionary monetary policy. This policy decreases or lowers the source of money for a country.
So expansionary monetary policy is:
- Reducing the required reserve ratio.
- Reducing the federal funds rate.
The contractionary monetary policy is:
- Increasing the discount rate
.