Expansionary monetary policy

What is the main goal of Expansionary Monetary Policy?

• Shift the AD curve left

• To stabilise inflation and stimulate sustainable economic growth

• Increase money supply and decrease interest rates

Which of the following is a potential long-term consequence of expansionary monetary policies if not managed properly, particulary in Argentina?

• Hyperinflation above 50%

• Inflation above 50%

• Stagflation

What are Reserve Requirements set by the central bank for?

• To limit the amount of money businesses can borrow from banks

• To control the interest rates set by commercial banks

• To increase the money supply

Expansionary monetary policy can lead to a wage-price spiral. What initiates this spiral?

• Increased wages (AD shifts right) trying to keep up with lower cost of living because AS has shifted right

• • Increased wages (AS shifts left) trying to keep up with rising costs of living because AD has shifted right

• • Reduction in consumer spending

Which sector in Argentina saw increases in employment due to the expansionary monetary policy?

• Manufacturing and construction, with structural unemployment decreasing at 9.5%

• Manufacturing, construction and agriculture, with cyclical unemployment decreasing marginally at 9.5%

• Manufacturing, construction and technology

What effect does Expansionary Monetary Policy have on consumers?

• Stabilizes consumer spending and purchasing power

• In the short run, it increases their spending but in the long run, it lowers their purchasing power

• In the short run, it increases their income but in the long run, it lowers their purchasing power

How do businesses benefit from Expansionary Monetary Policies?

• Increased borrowing opportunities

• Higher production costs

• Decreased investments

How did the U.S. respond to the 2008 recession?

• Increased interest rates

• Implemented quantitative easing

• Reduced government spending

What was the impact of the expansionary monetary policy on consumers?

• Increased spending in the short run and reduced purchasing power in the long run

• Increased income in the short run and reduced purchasing power in the long run

• Reduced purchasing power

The Argentinian government’s response to mitigate the adverse effects of its monetary policy included:

• Increasing taxes on utilities and basic goods

• • Subsidizing utilities and basic goods, particularly transportation

• • Eliminating all forms of government subsidies