Monetarists argue that when expansionary fiscal policy is financed through borrowing,
A)monetary policy becomes tight.
B)private investment spending will be crowded out.
C)the demand for money and interest rates both decrease.
D)the investment demand curve becomes relatively steep.

Question

Quizplus · Accepted Answer

Monetarists believe that government borrowing to finance expansionary fiscal policy leads to higher interest rates, which can crowd out private investment spending.

Monetarists Argue That When Expansionary Fiscal Policy Is Financed Through