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 1

Answer:

At the point when we talk about expansionary monetary strategy, it is only an approach which blows up or expands the source of the money of the country while contractionary financial arrangement diminishes or lowers the 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.

Answer 2

Expansionary monetary policy is classified as follows:  

1. Reducing the discount rate.
2. Buying government securities.

The types of monetary policy.

In Economics, there are two (2) main types of monetary policy that are used by government across the world and these include the following:

• Expansionary monetary policy: it's a type of monetary policy that involves an increase in money supply while decreasing or reducing interest (discount) rates.

• Contractionary monetary policy: it's a type of monetary policy that is used by government to reduce the overall economic activity.

Therefore, we would classify each action based on the types of monetary policy:

Expansionary monetary policy are:  

1. Reducing the discount rate.
2. Buying government securities.

Contractionary monetary policy are:

1. Increasing the required reserve ratio.
2. Increasing the federal funds rate.

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