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AP® Macroeconomics

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Expansionary Monetary Policy: Steps for Country A

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Which of the following would most likely be the steps Country A would take to keep an expansionary fiscal policy in place?

A

Buy bonds to increase the money supply and lower the interest rate.

B

Increase the discount rate to lower the real interest rate and raise investments.

C

Reduce taxes to lower the discount rate and raise consumption.

D

Increase the reserve requirement to decrease the interest and increase investment.

E

Increase government expenditures to lower the interest rate which raises investment.