Classify each action as expansionary or contractionary monetary policy. reducing the discount rate. increasing the federal funds rate. buying government securities. increasing the required reserve ratio.

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Question:

Classify each action as expansionary or contractionary monetary policy. reducing the discount rate. increasing the federal funds rate. buying government securities. increasing the required reserve ratio.

Answer:

When we talk about expansionary monetary policy, it is
just a policy which inflates or increases the source of money of the country while
contractionary monetary policy decreases or lowers the source of a country’s
money.

 

So expansionary is:

reducing the
discount rate.

buying
government securities.

While Contractionary
is:

increasing
the required reserve ratio.

increasing
the federal funds rate.

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