Answer to Question #212571 in Macroeconomics for BONGIWE

Question

Comparing the impact in the IS-LM model for a closed economy of an expansionary monetary policy with an expansionary fiscal policy on investment spending the result is that:

Answer 1

IS-LM model reduces taxes and increases spending to carry out bugdet deficits meaning that the government installs more finance in the economy compared to what it takes out. However, Expansionary fiscal policy executes through raising money supply or reducing short-term rate of interest more faster.