Easy monetary policy and tight fiscal policy lead to

Question

Quizplus · Accepted Answer

Easy monetary policy refers to a decrease in interest rates, making borrowing cheaper and increasing demand for goods and services. Tight fiscal policy refers to a decrease in government spending and/or an increase in taxes, which can reduce demand for goods and services. When easy monetary policy is combined with tight fiscal policy, the increase in real interest rates from the tighter fiscal policy is often offset by the decrease in interest rates from the easier monetary policy. Therefore, the overall effect is typically low real interest rates.

Easy Monetary Policy and Tight Fiscal Policy Lead to