An expansionary monetary policy to overcome a depression or deflationary gap the Central Bank uses -

Correct option is A

Ans. (a)
In an expansionary monetary policy, the Central Bank purchases government securities in the open market to inject liquidity into the economy. This stimulates investment and demand, helping to overcome a depression or deflationary gap.
Information Booster
1. Expansionary policies aim to reduce unemployment and boost GDP.
2. Other measures include reducing the CRR (Cash Reserve Ratio) and bank rate.
3. Selling government securities is a contractionary policy measure.
4. This policy helps stabilize economies during downturns and deflation.