Expansive monetary policy is a strategy used by central banks, like the Federal Reserve, to stimulate economic growth. This approach typically involves lowering interest rates and increasing the money supply, making borrowing cheaper for individuals and businesses. The goal is to encourage spending and investment, which can help boost economic activity during periods of slow growth or recession. By implementing expansive monetary policy, central banks aim to combat unemployment and prevent deflation. Tools such as quantitative easing may also be used, where the central bank purchases financial assets to inject liquidity into the economy. This can lead to increased consumer confidence and higher demand for goods and services.