In economics,
expansionary policies are
fiscal policies, like higher spending and tax cuts, that encourage economic growth. In turn, an
expansionary monetary policy is
monetary policy that seeks to
increase the size of the
money supply. In most nations, monetary policy is controlled by either a
central bank or a
finance ministry.
Neoclassical and
Keynesian economics significantly differ on the effects and effectiveness of monetary policy on influencing
the
realeconomy; there is no clear consensus on how monetary policy affects real economic variables (aggregate output or income, employment).
Both economic schools accept that monetary policy affects monetary variables
(price levels, interest rates).
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