With the long standing debate between Classical Theory and Keynesian Theory, with both fiscal (T & G) and monetary ( Investment via interest rates) policies work on the macro economy, what do you foresee happening from here?
Both fiscal policy and monetary policy go hand in hand and are adopted simultaneously today aa well as in future to generate required effects on economic climate
For example the US Government adopts an expansionary fiscal policy by reducing taxes and increasing government spending to bring higher GDP Growth
However this policy leads to inflation as well and hence the US Fed adopts contractionary monetary policy by increasing nominal interest rates and thus reducing inflation and unemployment and keeping GDP growth in control. Thus both policies work cohesively to achieve required macro numbers .
Get Answers For Free
Most questions answered within 1 hours.