In addition, the decrease in the money supply will lead to a decrease in consumer spending. The decrease in the money supply is mirrored by an equal decrease in the nominal output, otherwise known as Gross Domestic Product (GDP). What are the implication of contractionary monetary policy?Ĭontractionary monetary policy decreases the money supply in an economy. How expansionary fiscal policy can be implemented by a government? Contractionary fiscal policy occurs when Congress raises tax rates or cuts government spending, shifting aggregate demand to the left. What happens in expansionary fiscal policy?Įxpansionary fiscal policy occurs when the Congress acts to cut tax rates or increase government spending, shifting the aggregate demand curve to the right. Both of these policies are intended to increase aggregate demand while contributing to deficits or drawing down of budget surpluses. The two major examples of expansionary fiscal policy are tax cuts and increased government spending. What are examples of expansionary fiscal policy?
What are the goals of expansionary monetary policy?.What are the drawbacks of expansionary monetary policy?.How does expansionary monetary policy affect employment?.How does monetary policy affect economy?.Which of the following is a potential issue of countercyclical monetary policy?.How will a contractionary monetary policy affect exchange rates by income?.Which kind of monetary policy would you expect in response to recession expansionary or contractionary?.What is the difference between expansionary and contractionary monetary policy?.What are the implication of contractionary monetary policy?.What is a contractionary fiscal policy and why would it be employed?.What is the purpose of contractionary fiscal policy?.What are the benefits of contractionary fiscal policy?.What is the contractionary policy used for?.What is an example of contractionary fiscal policy?.How expansionary fiscal policy can be implemented by a government?.
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