Answer to Question #180748 in Economics for Abhishek Upadhyaya

Question

Which policy or policy mix would you use to achieve the 5-5-5 goal? Please explain the policy or the policy mix, clarify the policy instrument you would use, and discuss how it/they would work to achieve the goal

Answer 1

For example, if we use expansionary monetary policy only and as a result decrease interest rates, then the GDP growth will increase and unemployment will decrease, but the inflation rate will increase.

So, we should use a mix of both fiscal and monetary policies to stimulate the economy growth using taxes, government spending and changes in interest rates.