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In your opinion, which policy, the expansionary fiscal policy, or the expansionary monetary policy, will be...

In your opinion, which policy, the expansionary fiscal policy, or the expansionary monetary policy, will be more effective to recover the U.S. economy from the current downturn by COVID-19 pandemic? Why? Please state your answer in the language of economics.

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Answer #1

In my opinion a mix of both expansionary monetary and fiscal policy will be effective in combating covid-19 pandemic. Expansionary monetary policy will reduce the interest rate so that businesses will again start investment in a large scale to get out of this recession. But only increase in investment is not enough to survive this battle so here expansionary fiscal policy will come to the rescue. Expansionary fiscal policy will increase the effective demand in the market through government expenditure and injection of money in the economy. So a mix of both the policy is necessary.

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