Expansionary Monetary Policy Objective

Easy Macroeconomics Monetary And Fiscal Policy

In the context of macroeconomic policy, governments often engage in fiscal and monetary measures to manage economic performance. Fiscal policy involves government spending and tax decisions, whereas monetary policy is mainly concerned with controlling a nation’s money supply and interest rates. Which of the following statements accurately describes a common objective of expansionary monetary policy?

To increase aggregate demand by lowering interest rates.

To reduce inflation by tightening the money supply.

To balance the federal budget through tax increases.

Hint

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