On the other hand, given IS 0 curve, an expansionary policy will shift LM 0 to LM 1. According to the rational expectations hypothesis, a government attempt to trade higher inflation for lower unemployment MOST likely will ... Monetarists believe that government spending with a constant money supply will cause interest rates to _____ and investment spending to _____. According to monetarists, an expansionary fiscal policy:? Fiscal measures are frequently used in tandem with monetary policy to achieve certain goals. Monetarists make a clear distinction between pure fiscal policy where fiscal policy operates with no change in the money supply and a fiscal policy operating alongside a change in money supply. According to monetarists, an expansionary fiscal policy. According to monetarists, Multiple Choice ( 8 01:37:59 0 changes in the money supply are the primary cause of changes in the price level. Multiple Choice. D) will be effective, provided … B) should not be permitted so long as a public debt exists. B. will be ineffective because the interest rate will rise and crowd out private investment spending. ... expansionary fiscal policy had the capability … b.should not be permitted so long as a public debt exists. Many fiscal policy tools are based on Keynesian economics and hope to boost aggregate demand . C) should be used only when unemployment exceeds 6 percent of the labor force. The short-run aggregate supply curve began shifting to the left, but expansionary policy continued to shift aggregate demand … According to monetarists, an expansionary fiscal policy: A) will be ineffective because the interest rate will rise and crowd out private investment spending. Learn more about fiscal policy in this article. The government collects taxes in order to finance expenditures on a number of public goods and services … D) net exports. Thus according to monetarists, fiscal policy is ineffective and monetary policy is effective in influencing the income … A. should not be permitted so long as a public debt exists. This will reduce the rate of interest from Oi 0 to Oi 2, encourage investment and thus increase income level from OY 0 to OY 1. Fiscal policy, measures employed by governments to stabilize the economy, specifically by manipulating the levels and allocations of taxes and government expenditures. Expansionary fiscal and monetary policy early in the 1960s (Panel [a]) closed a recessionary gap, but continued expansionary policy created an inflationary gap by the end of the decade (Panel [b]). C) consumer nondurables. C. should be used only when unemployment exceeds 6 percent of the labor force. B) government expenditure. A loose or expansionary fiscal policy is just the opposite and is used to encourage economic growth. 106. According to the traditional interest-rate channel, expansionary monetary policy lowers the real interest rate, thereby raising expenditure on. Answer to: According to monetarists, an expansionary fiscal policy: a. Fiscal and Monetary Policy Fiscal Policy Fiscal policy is carried out by the legislative and/or the executive branches of government. A) business fixed investment. 2. The latter could be due either to a deliberately chosen mix of fiscal and monetary policies or to a passive adjustment of money supply to … The two main instruments of fiscal policy are government expenditures and taxes. Eventually, its budget deficit will become too large, driving up its debt to an unsustainable level. 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according to monetarists, an expansionary fiscal policy

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