Initially, the economy was in the below full-employment equilibrium. Suppose that we would like to consider...

 

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Initially, the economy was in the "below full-employment equilibrium". Suppose that we would like to consider a fiscal policy to maintain the full- employment equilibrium. Which choice(s) explain the situation correctly? O Government can use the expansionary fiscal policy by increasing the money supply O Government can use the expansionary fiscal policy by increasing its spending and tax cut. Fed can use the expansionary fiscal policy by increasing the money supply Government can use the contractionary fiscal policy by decreasing its spending and increasing tax. Initially, the economy was in the "below full-employment equilibrium". Suppose that we would like to consider a fiscal policy to maintain the full- employment equilibrium. Which choice(s) explain the situation correctly? O Government can use the expansionary fiscal policy by increasing the money supply O Government can use the expansionary fiscal policy by increasing its spending and tax cut. Fed can use the expansionary fiscal policy by increasing the money supply Government can use the contractionary fiscal policy by decreasing its spending and increasing tax.

Answer rating: 100% (QA)

The correct option is option 2 Fiscal policy uses taxes and government ... View the full answer