Answer to Question #226997 in Macroeconomics for Arham

Question

Discuss the circumstances under which the monetary and fiscal policy multipliers are each, in turn, equal to zero. explain in words why this can happen and how likely you think this is.

Answer 1

The maximum amount of commercial bank money created in the economy is determined by the monetary policy multiplier. When each branch of government focuses on its strengths, the policy is most effective. As a result, the Fed should focus on maintaining monetary stability. Consider the statements that Fed officials make on a regular basis while the monetary offset is in operation.