Which of the following actions represents an expansionary monetary policy?

Show Answers

Lowering the tax rate on bank earnings.Raising the mandatory reserve requirement for banks.Increasing the interest rate charged on loans from the central bank.The central bank purchasing government bonds through open market operations.

Explanation

Option A involves tax policy, which is fiscal, not monetary. Option B tightens monetary policy by increasing reserve requirements. Option C raises borrowing costs, which is contractionary. Option D involves the central bank buying government securities, injecting liquidity into the economy, thus representing expansionary monetary policy.