When monetary policy is used to increase Aggregate Demand by printing more dollars, it can...

Question:

When monetary policy is used to increase Aggregate Demand by printing more dollars, it can actually become less effective in stimulating the economy once the number of dollars printed exceeds a certain threshold.

Why might this be the case? Explain in 2-3 sentences.

Monetary policy:

Monetary policy is an integral part of the economic policy and used to stabilize the money supply and price level in an economic system by adjusting the market rate of interest. The Monetary Authority (federal reserve) is responsible to make the changes and adjustments.

Answer and Explanation:

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On the basis of the given information, we can associate this statement with the 'expansionary monetary policy'. This kind of policy usually meant for...

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