Question

Which of these are goals of an expansionary policy? Check all that apply.

increased available credit
decreased available credit
increased money supply
increased inflation
increased interest rates
decreased interest rates

Answer 1

Checked:
- increased available credit ✓
- increased money supply ✓
- increased inflation ✓
- decreased interest rates ✓

Unchecked:
- decreased available credit ✗
- increased interest rates ✗

Explanation: Expansionary policy (especially monetary) increases the money supply and lowers interest rates to encourage borrowing and increase available credit, which boosts aggregate demand and can raise inflation.