The more that _________ policy prevents a rise in interest rates, the more the _______ expansion will
Lead to higher output.
A) fiscal, fiscal
B) fiscal, monetary
C) monetary, monetary
D) monetary, fiscal

Question

Quizplus · Accepted Answer

Monetary policy can influence interest rates, and when it prevents a rise in interest rates, it can make borrowing cheaper. This, in turn, can facilitate fiscal expansion (through increased government spending or tax cuts) to have a more significant impact on boosting output, as the lower interest rates encourage more investment and consumption.

The More That _________ Policy Prevents a Rise in Interest