n NISM Certifications
XV NISM Series XV
Medium

Expansionary monetary policy is used to stimulate the economy. Which of the following measures are involved?

Practice question from NISM XV Mock Test 7 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Reduction in the money supply

  2. B

    Increasing the money supply

  3. C

    Reduction in interest rates

  4. Both B and C

    Correct answer

Why this is the answer

Expansionary monetary policy increases money supply and lowers interest rates to encourage borrowing, consumption, and investment. Reducing money supply would restrict liquidity, making option A incorrect.

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