monetary policy

This question is about understanding the tools available to a government when it wants to implement an expansionary monetary policy.

Expansionary monetary policy is used to stimulate the economy, typically by increasing the money supply and lowering interest rates to encourage borrowing and investment.

- Option A: Discourage bank lending - This would actually have the opposite effect of what is desired in an expansionary policy, as it would reduce the money supply and economic activity.

- Option B: Give subsidies to firms - While subsidies can stimulate economic activity, they are more related to fiscal policy rather than monetary policy.

- Option C: Lower income tax thresholds - This is also a fiscal policy tool, not a monetary one.

It involves changing tax rates, which is not directly related to controlling the money supply.

- Option D: Lower interest rates - This is a classic tool of expansionary monetary policy.

By lowering interest rates, borrowing becomes cheaper, encouraging businesses and consumers to take loans and spend more, thus stimulating economic growth.

Therefore, the correct answer is D: lower interest rates.