In the IS-LM model, if there is expansionary fiscal policy and expansionary monetary policy at the same time, then output ____ and the interest rate ____..

In the IS-LM model, if there is expansionary fiscal policy and expansionary monetary policy at the same time, then output and the interest rate ..

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter15: The Debate Over Monetary And Fiscal Policy

Section: Chapter Questions

Problem 6DQ

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Question

In the IS-LM model, if there is expansionary fiscal policy and expansionary monetary policy at the same time, then output ____ and the interest rate ____..

Definition Definition Policy implemented by the central bank of a country (such as the Federal Reserve in the United States) to achieve certain macroeconomic objectives. Monetary policy is a supply-side macroeconomic policy that supervises the growth rate and money supply in the economy.

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Step 1: Define Expansionary Fiscal and Monetary Policy

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Step 2: Explain the effect on output and interest rates from expansionary policy.

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