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Expansionary fiscal and monetary policy early in the 1960s (Panel [a]) closed a recessionary gap, but continued expansionary policy created an inflationary gap by the end of the decade (Panel [b]). An expansionary fiscal policy is a powerful tool, but a country can't maintain it indefinitely. Thus according to monetarists, fiscal policy is ineffective and monetary policy is effective in influencing the income … ... expansionary fiscal policy had the capability … c.will be ineffective because the interest rate will rise and crowd out private investment spending. B) government expenditure. C) should be used only when unemployment exceeds 6 percent of the labor force. According to monetarists, an expansionary fiscal policy:? Answer to: According to monetarists, an expansionary fiscal policy: a. According to monetarists, an expansionary fiscal policy. The government collects taxes in order to finance expenditures on a number of public goods and services … A. should not be permitted so long as a public debt exists. The short-run aggregate supply curve began shifting to the left, but expansionary policy continued to shift aggregate demand … Fiscal measures are frequently used in tandem with monetary policy to achieve certain goals. Monetarists make a clear distinction between pure fiscal policy where fiscal policy operates with no change in the money supply and a fiscal policy operating alongside a change in money supply. According to the traditional interest-rate channel, expansionary monetary policy lowers the real interest rate, thereby raising expenditure on. Multiple Choice. C. should be used only when unemployment exceeds 6 percent of the labor force. a.should be used only when unemployment exceeds 6 percent of the labor force. 0 changes in the velocity of money are more important than changes in the money supply in … C) consumer nondurables. Many fiscal policy tools are based on Keynesian economics and hope to boost aggregate demand . A) business fixed investment. B. will be ineffective because the interest rate will rise and crowd out private investment spending. D) net exports. The latter could be due either to a deliberately chosen mix of fiscal and monetary policies or to a passive adjustment of money supply to … This will reduce the rate of interest from Oi 0 to Oi 2, encourage investment and thus increase income level from OY 0 to OY 1. Fiscal policy, measures employed by governments to stabilize the economy, specifically by manipulating the levels and allocations of taxes and government expenditures. b.should not be permitted so long as a public debt exists. 106. Fiscal and Monetary Policy Fiscal Policy Fiscal policy is carried out by the legislative and/or the executive branches of government. Learn more about fiscal policy in this article. B) should not be permitted so long as a public debt exists. According to monetarists, an expansionary fiscal policy: A) will be ineffective because the interest rate will rise and crowd out private investment spending. The two main instruments of fiscal policy are government expenditures and taxes. 2. D) will be effective, provided … According to monetarists, Multiple Choice ( 8 01:37:59 0 changes in the money supply are the primary cause of changes in the price level. 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