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Expansionary Meaning: Definition, Examples, and Translations

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expansionary

[ษชkหˆspรฆnสƒษ™nษ™ri ]

Definition

Context #1 | Adjective

economic policy

Expansionary refers to a type of economic policy that aims to stimulate the economy by increasing the money supply or lowering interest rates. This approach is often employed during periods of economic downturn to encourage spending and investment. Expansionary policies can also include increased government spending or tax cuts, which aim to boost consumer confidence and drive economic growth. The ultimate goal is to reduce unemployment and support overall economic expansion.

Synonyms

liberal, pro-growth, stimulative.

Examples of usage

  • The government implemented expansionary policies to combat the recession.
  • An expansionary fiscal policy can lead to increased job creation.
  • Lowering interest rates is a common expansionary measure taken by central banks.

Translations

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Interesting Facts

Economic Theory

  • Expansionary policies are often used during recessions to encourage spending and investment.
  • This approach can involve lowering interest rates to make borrowing cheaper for businesses and consumers.
  • Governments might also increase public spending on projects to create jobs and stimulate growth.

Historical Context

  • During the Great Depression, expansionary policies were implemented to boost the economy and reduce unemployment.
  • In the aftermath of the 2008 financial crisis, central banks worldwide employed expansionary strategies to mitigate the economic downturn.
  • The 'New Deal' in the 1930s is an example of expansionary measures aimed at economic recovery in the U.S.

Global Impact

  • Countries like Japan have used expansionary monetary policies to combat decades of stagnation, impacting global markets.
  • Inflation can be a side effect of aggressive expansionary policies, leading to debates on balancing growth and stability.
  • Emerging markets often adopt expansionary strategies to attract foreign investment and promote rapid development.

Criticism

  • Critics argue that excessive use of expansionary measures can lead to unsustainable debt levels.
  • Some economists warn that it may create asset bubbles, where prices inflate beyond their true economic value.
  • Concerns also exist about long-term inflationary pressures that could arise from persistent expansionary policies.

Related Concepts

  • 'Monetary policy' is closely linked, as central banks adjust money supply to influence expansionary effects.
  • 'Fiscal policy' involves government spending and tax policies that can also drive economic expansion.
  • The term 'quantitative easing' refers to central banks purchasing assets to inject money into the economy, a form of expansionary policy.

Origin of 'expansionary'

The term 'expansionary' derives from the root word 'expand,' which originated from the Latin 'expandere,' meaning 'to spread out.' The prefix 'ex-' means 'out' and 'pandere' means 'to spread.' The concept has been used in various contexts throughout history, primarily in economics. Its use gained prominence in the 20th century, particularly during the Great Depression when governments sought ways to invigorate failing economies. Economists studied the effects of expansionary policies, leading to the establishment of Keynesian economics, which emphasizes the role of government intervention in stimulating economic growth. Today, expansionary policy remains a key topic in economic discussions, particularly in response to financial crises.

Word Frequency Rank

Positioned at #24,758, this word is part of extensive vocabulary. It's relatively rare in general usage but may be important in specific fields or formal writing.