Fiscal policy of increasing government expenditures can be more potent than monetary policy in getting us out of a recession because Question 44 options: Monetary policy takes a lot of time to implement there is no lagged effect of fiscal policy on GDP Monetary policy produces too much uncertainty Fiscal policy has a larger multiplier effect

Answered: Fiscal policy of increasing government…

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter16: Expectations Theory And The Economy

Section: Chapter Questions

Problem 10QP

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Fiscal policy of increasing government expenditures can be more potent than monetary policy in getting us out of a recession because

Question 44 options:

	Monetary policy takes a lot of time to implement
	there is no lagged effect of fiscal policy on GDP
	Monetary policy produces too much uncertainty
	Fiscal policy has a larger multiplier effect

Expert Solution

Step 1

Fiscal and monetary policy:

Fiscal policy signifies the policies taken by the government of an economy by increasing or decreasing govt expenditure and taxes to control the economic output.

Monetary policies are operated by the central banks. The manipulation of money supply and interest rate to control economic output is known as monetary policy.

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