Question

In an expansionary monetary policy, the resulting fall in the interest rate is partially offset because...

A) it increases investment
B) it decreases government spending
C) it raises taxes
D) it reduces consumer confidence

Answer 1

In expansionary monetary policy, the fall in the interest rate is partially offset because it increases investment.

Step-by-step explanation:

In an expansionary monetary policy, the resulting fall in the interest rate is partially offset because it increases investment. When the central bank implements expansionary monetary policy, it increases the money supply and lowers interest rates. This stimulates borrowing for investment, as lower interest rates make it cheaper for businesses to borrow money and invest in new projects.