Expansionary Monetary Policy Effects Steps:

• Expansionary monetary policy increases money supply, lowering interest rates.
• Lower rates boost investment and consumption, shifting AD curve right.
• This raises real GDP and price level in the short run.
• Higher output reduces unemployment via Okun's law.

Why A is correct:

• Matches AD increase: real GDP rises from higher spending, prices rise from demand pressure, unemployment falls as firms hire more (Okun's law links GDP growth to ~2% drop in unemployment per 1% GDP rise).

Why the others are wrong:

• B: Unemployment rises contradicts policy's stimulative effect on labor demand.
• C: Price level falls and unemployment rises ignore inflationary and employment-boosting impacts.
• D: Identical to C, so same errors.

Final answer: A