Agovernment might enact expansionary spending when it is trying to increase aggregate demand for goods. decrease aggregate demand for goods. slow an economic expansion. lower a budget deficit.

The correct answer is: "increase aggregate demand for goods".

An expansionary monetary policy consists on implementing mechanisms seeking to estimulate the economy. The most widely used strategy is to lower interest rates so that funding becomes cheaper. Another expansionary tool could be to increase money supply, but although this could boost demand it can also generate an inflation problem, so it can end up being a dangerous mechanism.

In a low interest rates scenario, investment becomes more attractive, more projects start, more people is hired to undertake them and higher demand levels are registered, resulting in economic growth. Moreover, easy access to cheap money can also boost demand directly, as in that situation is much easier to obtain money to pay for some goods or services really desired by a consumer.

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