Answer:
Expansionary monetary policy
Explanation:
Expansionary monetary policies refer to the Federal Reserve's actions to increase the money supply in the economy to stimulate economic growth. Expansionary monetary policies seek to add more money to households and businesses to encourage investments and consumption. These policies are used in times of economic downturns or recessions.
An increase in the money supply results in more consumer and investment spending, which increases the aggregate demand. When the aggregate demand increases, factories increase their production, hire more workers, which translates to an increase in GDP and a reduction in the unemployment rate. Examples of expansionary monetary policies include decreasing the discount rate, open market purchases reducing the reserve requirements.
