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.

When we talk about expansionary monetary policy, it is just a policy which inflates or increases the source of money of the country while contractionary monetary policy decreases or lowers the source of a 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.

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Tundexi Tundexi · Answer 2 · 2022-01-10T11:45:42+01:00

An expansionary monetary policy is a policy which aim to expand money supply faster than usual and also lowers short-term interest rates.

The reduction of discount rate and buying of government securities is an example of expansionary monetary policy because it increases money supply.

A contractionary monetary policy is a policy which decreases or lowers the money supply than usual.

The increase of required reserve ratio and federal funds rate is an example of contractionary monetary policy because it reduces money supply.