What is the goal of expansionary monetary policy?

The goal of expansionary monetary policy is to increase the money supply and lower interest rates. This approach is typically employed by central banks to stimulate economic growth, especially during periods of recession or economic downturn. By increasing the money supply, the central bank makes more funds available for banks to lend, which, in turn, encourages businesses and consumers to borrow and spend more. Lowering interest rates reduces the cost of borrowing, making loans more accessible and affordable. As spending increases, it can lead to higher demand for goods and services, which helps to boost economic activity and reduce unemployment.

In contrast, the other choices represent different economic goals or strategies that do not align with the fundamental purpose of expansionary monetary policy. For instance, reducing inflation and slowing down economic growth would typically be associated with contractionary monetary policy, which is aimed at cooling down an overheated economy. Stabilizing government spending and taxation relates to fiscal policy rather than monetary policy, which focuses on controlling the money supply and interest rates. Increasing taxes on businesses also does not fit the expansionary framework, as raising taxes can often reduce disposable income and lower demand, which counteracts the objectives of stimulating economic growth through expansionary measures.