What is the main aim of expansionary monetary policy?

The main aim of expansionary monetary policy is to increase the money supply and stimulate economic growth. This policy is implemented by central banks, such as the Federal Reserve, particularly during periods of economic downturn or recession. By increasing the money supply, the central bank lowers interest rates, making borrowing cheaper. This encourages consumer spending and investments by businesses, leading to greater economic activity.

The rationale behind this approach is that when money becomes more available and cheaper to borrow, it can help boost demand for goods and services, which in turn can help to increase production and potentially reduce unemployment. This policy ultimately aims to foster economic recovery, increase consumer confidence, and promote sustainable growth within the economy.