The federal government participates in the country's money supply through the central bank. In real life, examples of involvement include buying and selling Treasury bills and bills. According to Hung and Thompson (2016), such a strategy is called an open market operation. Other examples include the change in bank reserves involved and the direct involvement that occurs through increases or decreases in government spending or changes in tax rates. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay Expansionary monetary policy is one of the strategies employed by the federal government to boost economic activity. The policy, however, has not been effective in the past. As Romer & Romer (2013) explain, the main factors of ineffectiveness include uncertainties in the economic environment and excessive discretionary power entrusted to policy makers in the federal government. As a result, policymakers have adopted policies that aim for short-term gains in employment and growth (Goodhart, 2015). The recurring adoption of excessive short-term targeting has led to high levels of inflation and an unstable economy, thus weak economic growth. However, the federal government still uses expansionary monetary policy as it has significant benefits in the economy. Most obviously, the system usually aims to increase the money supply in the economy. According to Ma (2015), an increase in the money supply can help recover a recessionary economy through improved production leading to an increase in corporate and income taxes. As a result, the government can provide better social services to citizens, thus improving their lives. Furthermore, an expansionary monetary policy lowers interest rates, which makes the expansion of emerging and medium-sized companies possible and encourages foreign investment (Romer, & Romer, 2013). Businesses create job opportunities while the injection of foreign currency into the economy leads to better exchange rates, improving economic development. Please note: this is just an example. Get a custom paper from our expert writers now. Get a Custom Essay All in all, the Expansionary monetary policy has not been effective in recent years, but the federal government still uses it. Key reasons for continued use include creating jobs, managing inflation rates, and ensuring economic growth and stability. In conclusion, expansionary monetary policy has significant benefits but should be used with caution.