Monetary policy refers to the actions undertaken by a nation's central bank to control money supply and achieve sustainable economic growth. Typically this involves a central bank cutting official policy … Outline how expansionary monetary policy can be implemented. Do interest rates affect business investment? Demand Side Policies are attempts to increase or decrease aggregate demand to affect output, employment, and inflation. April 26th, 2018 - Equipping Educators Educating Students And Empowering Consumers Filter » Filter By''exam answer monetary policy and economic growth tutor2u march 15th, 2016 - here is a good student answer to exam answer monetary policy … Generally though, the UK economy has experienced a … tutor2u partners with teachers & schools to help students maximise their performance in important exams & fulfill their potential. 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An expansionary monetary policy makes most sense during a recession. Firstly, deflation can increase the real interest rate. Fiscal policy refers to the use of taxes and government spending to achieve desirable changes in aggregate demand. It's effective in adding more liquidity in a recession. 1. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas. Aggregate Demand is made up of Consumer Spending … Expansionary monetary policy causes an increase in bond prices and a reduction in interest rates. Proponents of expansionary monetary policy state that even if banks lower interest rates for consumers to spend more money during a global recession, the export sector would suffer. In general, demand-side policies aim to change the aggregate demand in the economy. 214 High Street, UK target is CPI 2% +/-1. Monetary policy is also concerned with maintaining a sustainable rate of economic growth and keeping unemployment low. 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