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If a government wants to boost the economy, what monetary or fiscal policies can they use?...

If a government wants to boost the economy, what monetary or fiscal policies can they use? (1) Provide 2 monetary policy suggestions; (2) Provide 2 fiscal policy suggestions. Please Describe Answer in 1-2 Sentences.

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Expert Solution

1) For boosting economy, the type of monetary policies that can be used are:

  • Interest rate should be reduced so that it becomes easier for the firms and households to borrow for investing and consumption purposes.
  • Government can buy securities from the people which will increase the money supply in the economy.

2) For boosting economy, type of fiscal policies that can be used are:

  • Government should increase its spending in the economy and invest in building of infrastructure for development.
  • Tax rate should be reduced to increase the disposable income of consumers and lead to more consumption.

Rahul Sunny answered 2 years ago
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