Question

Expansionary monetary policy occurs when: Group of answer choices a central bank acts to decrease the money supply in an effort to stimulate the economy. Congress and the president increase taxes in an effort to stimulate the economy. Congress and the president decrease taxes in an effort to stimulate the economy. a central bank acts to increase the money supply in an effort to stimulate the economy.

Answer 1

Answer: A central bank acts to increase the money supply in an effort to stimulate the economy.

Explanation:

When a country is seeing an expansionary monetary policy, it means that the Central bank in the country is increasing the money supply in order to stimulate the economy and increase aggregate production in the economy.

Increasing money supply would lead to more people having cash which would reduce the cost of borrowing money since everyone now has more savings. As the cost of borrowing is less, more entities borrow for investment which would then lead to increased production and economic growth.