Is it possible for congress and the president to carry out an expansionary fiscal policy if the money supply does not increase?

Question

Social Studies

Boston Stevens

2 February, 06:38

Is it possible for congress and the president to carry out an expansionary fiscal policy if the money supply does not increase?

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Answers (1)

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Grady Hudson · Answer 1

Yes, it is possible because the fiscal policy and the monetary policy are separate from each other.

Explanation:

It is important to understand that the fiscal policy and monetary policy work in parallel with each other but are focused on two separate goals or are designed for two separate purposes. Fiscal policy is focused on government spending and tax rates to balance the country's expenditure and financial situation. On the other hand, the monetary policy is focused on the money supply and availability of money in the country for trade and other purposes. Hence, it is possible for congress and the president to carry out an expansionary fiscal policy if the money supply does not increase because the fiscal policy and the monetary policy are separate from each other.