As a result of an economic policy change, interest rates and consumption rise but investment falls. The new policy was: a) an expansionary fiscal policy. b) and expansionary monetary policy. c) a contractionary fiscal policy d) a contractionary monetary policy.

As a result of an economic policy change, interest rates and consumption rise but investment falls. The new policy was: a) an expansionary fiscal policy. b) and expansionary monetary policy. c) a contractionary fiscal policy d) a contractionary monetary policy.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter14: Macroeconomic Policy: Tradeoffs, Expectations, Credibility, And Sources Of Business Cycles

Section: Chapter Questions

Problem 10E

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Question

As a result of an economic policy change, interest rates and consumption rise but investment falls. The new policy was:

a) an expansionary fiscal policy.

b) and expansionary monetary policy.

c) a contractionary fiscal policy

d) a contractionary monetary policy.

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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