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Since Changes in Both Monetary Policy and Fiscal Policy Can

question 173

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Since changes in both monetary policy and fiscal policy can shift the aggregate demand curve, it doesn't matter whether we reduce income taxes or reduce the target inflation rate to increase real GDP. Both policies will have the same effect on consumption, net exports, and investment. Please answer true or false and explain.


Definitions:

Interest Rate

The proportion of a loan that is charged as interest to the borrower, commonly expressed as an annual percentage of the loan outstanding.

Missing Value

A term used in statistics and data analysis for a data point that is not recorded or is unknown.

Term Deposit

A type of bank deposit that has a fixed term and typically offers a higher interest rate than a regular savings account, where withdrawing funds before the term ends may result in penalties.

Interest Rate

The percentage at which interest is charged or paid on borrowed or lent money over a specific period.

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