Question

Regardless of the outcome in the long run, ______________________ always has the effect of stimulating the economy in the short run.

Answer 1

D. Expansionary Monetary Policy

Step-by-step explanation:

First, the Options

a. tight monetary policy

b. contractionary monetary policy

c. reverse quantitative easing policy

d. expansionary monetary policy

The Expansionary monetary policy represents a policy of the Central Bank or the federal reserve used as a tool to boost or stimulate the economy. Some of the expansionary monetary policy actions of the Central Bank include: increases the supply of money into the economy and the lowering of interest rates which results in increased aggregate demand and subsequently a boost in the growth of the gross domestic product.

A good example of ths monetary policy is when the U.S. Federal Reserve uses the open market operations tool which involves it buying its member banks treasury notes thereby increasing the amount of money in circulation.