Which of the following combinations would have been most appropriate if Japanese policy-makers thought that both fiscal and monetary policy would provide demand stimulus and help promote recovery during the 1990s?

Question

Quizplus · Accepted Answer

Both an increase in government spending and expansionary monetary policy would provide demand stimulus and promote recovery during the 1990s. Government spending would directly increase demand in the economy while expansionary monetary policy would lower interest rates, encouraging borrowing and spending. A combination of both policies would be the most appropriate for promoting recovery in the Japanese economy during the 1990s.

Which of the Following Combinations Would Have Been Most Appropriate