What is the difference between an expenditure-changing policy and an expenditure-switching policy?
What will be an ideal response?
An expenditure-changing policy alters the level of the economy's total demand for goods and services. An expenditure-switching policy, on the other hand, induces an exchange rate adjustment and thus changes the direction of demand, shifting it between domestic output and imports.
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A key concern of monetary policy makers is credibility. In particular, that people believe that inflation will not deviate far from a rate consistent with a healthy macroeconomy. How might credibility affect the slope of the monetary policy curve?
What will be an ideal response?
If the government wants to borrow money to build new highways; then the
A) interest rate will be higher. B) quantity of funds available in the market will increase. C) private investment will decrease. D) All of the above.