Questions: When aggregate demand falls too much, to increase aggregate demand, we can use monetary policy.

The answer is expansionary.

Expansionary monetary policy is used to increase aggregate demand. This involves actions such as lowering interest rates or increasing the money supply, which encourages borrowing and spending by businesses and consumers, thereby boosting economic activity.

Contractionary monetary policy is used to decrease aggregate demand. This typically involves raising interest rates or reducing the money supply, which discourages borrowing and spending, slowing down economic activity. This is not suitable when the goal is to increase aggregate demand.