Question

How do the expansionary and contractionary

monetary policy affect the quantity of money?

Short answer

Expansionary and contractionary financial programs affect the quality of money in an frugality.

Step-by-step solution

:Concept Preface 

Expansionary and Contractionary Monetary Programs
Any financial policy that reduces the rates of interest and further, stimulates borrowing is known as loose financial policy or expansionary financial policy. Still, any financial policy that increases the rates of interest and also, reduces borrowing in an frugality is known as tight financial policy or contractionary financial policy. Similar programs are veritably important in fighting affectation.

:Explanation of Solution

Contractionary policy also known as tight financial policy reduces the force of loanable finances in the economy. As a result of which interest rates increase in an frugality. It's principally an profitable policy used to combat affectation. By dwindling the money force through this policy in order to increase the cost of borrowing, affectation is dampened. On the negative, expansionary policy also known as loose financial policy increases the force of loanable finances in the frugality. As a result of which interest rates drop in an frugality. It's principally an profitable policy used to encourage profitable growth, and combat inflationary price increase by expanding the money force.
Hence, expansionary and contractionary financial programs affect the quality of money in an frugality. The Federal Reserve employs these financial programs to lowers the standard civil finances rate or reduction rate, and dwindling required reserves for banks.