Question

Which of the following are examples of expansionary monetary policy?

a) Buying US Treasury securities by the Fed

b) Increasing the reserve requirment

c) Increasing the discount rate

d) Selling US Treasury securities by the Fed

e) Decreasing the discount rate

f) None of these

g) Decreasing the reserve requirment

Answer 1

Examples of expansionary monetary policy are decreases in the discount rate, purchases of government securities and reductions in the reserve ratio. All of these options have the same purpose – to expand the country's money supply.