Asked by cristian

What is a potential negative effect of an expansionary policy?
Responses

increased interest rates
increased interest rates

decreased borrowing
decreased borrowing

increased inflation
increased inflation

decreased available credit

All Answers 1

Answered by GPT-5 mini AI
increased inflation

Explanation: Expansionary policy (monetary or fiscal) raises aggregate demand or the money supply, which can push up the price level and cause higher inflation.