Question

level 1 which of the following best describes expansionary monetary policy and one potential impact of its use? expansionary monetary policy decreases the money supply by raising the discount rate and selling government securities, which limits borrowing and lowers inflation. expansionary monetary policy increases the money supply by buying government securities, lowering the discount rate, and reducing the reserve requirement. expansionary monetary policy decreases the money supply by selling government securities, raising the discount rate, and increasing the reserve requirement, which slows inflation and reduces unemployment. expansionary monetary policy increases the money supply by buying government securities, lowering the discount rate, and reducing the reserve requirement, which encourages borrowing, spending, and business investment.

Explanation:

Expansionary monetary policy aims to increase the money supply. Buying government securities injects money into the economy. Lowering the discount rate makes borrowing cheaper for banks. Reducing the reserve requirement allows banks to lend more. These actions encourage borrowing, spending, and business investment.

Answer:

Expansionary monetary policy increases the money supply by buying government securities, lowering the discount rate, and reducing the reserve requirement, which encourages borrowing, spending, and business investment.