username3080360
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Hi guys, I was wondering if someone could help with understanding what the different conflicts between macroeconomic policies and how they work? For example monetary policy vs fiscal policy.

Thank you 😊
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Imdoomed
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Monetary policy is a manipulation of monetary values.

Fiscal policy is a change in government spending and revenue.

By conflicts I think you mean macroeconomic objectives.
- low and stable inflation.
- economic growth.
- low unemployment rate.
- equilibrium/surplus in the current accounts balance of payments.
- rising living standards.

I'll give you a simple example so that you can let your brain do the rest

Monetary policy can be used; the MPC set high interest rates in order to discourage spending and increase saving. As interest rates increase, this acts as an incentive for consumers to save; however (this is where the conflict comes in) a big component in AD is consumption, if consumption decreases, so does economic growth, which is an objective.
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asdfghjkl2609
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Think about the trade-off between the different objectives. If you have increasing AD, you're going to possibly get higher inflation which can result in AD falling back down again.
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