⭐️ MONETARY & FISCAL POLICY

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7 Terms

1
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What are the Fed’s tools?

OMO

2
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What happens when the Fed buys bonds?

Money supply ↑

3
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What happens when the Fed sells bonds?

Money supply ↓

4
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When do we use expansionary monetary policy?

Recession.

5
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When do we use contractionary monetary policy?

Inflation.

6
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What is expansionary fiscal policy?

G↑ or T↓ → AD↑.

7
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What is contractionary fiscal policy?

G↓ or T↑ → AD↓.