Question

Compare fiscal policy with monetary policy. What are they, how are they similar, and how do they differ? Your answer should consider the role of government deficits (i.e., the national debt) in each and at least touch upon the concepts of "monetizing the debt," "velocity," the "Keynesian multipliers," "crowding out," and "Ricardian equivalence." How does your answer relate to aggregate demand and loanable funds market? What is a liquidity trap?

Answer 1

The monetary policy that it takes is made by RBI for improving the economy of its country and the policy made by the government is called a fiscal policy. That policy is also made by the government to improve the economy of the country, both of which are similar policies. Because both policies have the same work to increase or improve the country's economy if we talk about the differences in both the policies So one policy is constituted by the RBI and the second policy is constituted by the government, the only difference is found in both the policies.

National debt:

National debt is one that is taken from its allies for the development of the country, which is called a national debt.

Monetization of debt

Lack of money or more, due to which the economy of the country is fluctuating.

Velocity

To change the rate of the condition of an object, they say that the velocity of all objects is different and this is the vector sum.

Kinastan calculated

This is a multiplication based on employment of calculatedwhen employment is increased, then the amount of employment increases manifold and it also increases.

Crowd out

Due to the national debt which is the external girl crowd, monetary policy and fiscal policies are formed to exclude that crowd, due to which we can also call the concept of outside and outside.

Ricardian concept

Under Ricardian, growth is the concept of growth, growth and development, continuous, is called the Ricardian concept.

The total demand and the loanable are facing each other in front of each other, the liquidity trap is not good. The good relationship is called the liquidity trap, which is not visible between the total demand and the radio.