Expansionary monetary policy boosts output Steps:

• Central bank cuts interest rates to encourage borrowing and spending.
• Lower rates reduce borrowing costs for firms and households.
• Increased investment and consumption raise aggregate demand.
• Higher demand leads to greater production and GDP growth.

Why D is correct:

• In the AD-AS model, lower interest rates shift aggregate demand rightward, increasing equilibrium output (GDP).

Why the others are wrong:

• A: Benefits borrowers but is a means to broader growth, not the primary consequence.
• B: Currency may depreciate from capital outflows, but depends on global rate differentials.
• C: Lower rates fuel demand, raising inflation rather than reducing it.

Final answer: D