im just wondering what evaluation points people might use for evaluating contractionary fiscal and monetary policies
If im basing this exactly on the opposite to expansionary policies is it that it will fail when there is high confidence and causes crowding in?
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a level contractionary policy evaluation watch
- Thread Starter
Contractionary monetary policy >> central bank reducing money supply (L) causing LM curve to shift rightward raising interest rates and lower income/output (Y)
Contractionary fiscal policy >> reduction in government spending or higher taxes shift IS curve to the right >> lower interest rates and income/output