Which of the following is NOT a combination of an expenditure-switching and an expenditure-reducing policy?
A)an increase in tariffs combined with restrictive monetary policy
B)an increase in tariffs combined with restrictive fiscal policy
C)restrictive monetary policy combined with expansionary fiscal policy
D)open market sales combined with a devaluation in the currency
E)an income tax increase combined with a devaluation of the currency

Question

Quizplus · Accepted Answer

Restrictive monetary policy combined with expansionary fiscal policy is not a combination of an expenditure-switching and an expenditure-reducing policy. Restrictive monetary policy reduces aggregate demand by decreasing the money supply, while expansionary fiscal policy increases aggregate demand by increasing government spending or decreasing taxes. This combination of policies does not aim to shift the composition of expenditure from imports to domestically produced goods (expenditure-switching) or reduce overall expenditure (expenditure-reducing).

Which of the Following Is NOT a Combination of an Expenditure-Switching