Principles of Macroeconomics / Unit 14 MAC 1328 short lesson, about 20 seconds
The Policy Mix
Captions available
The idea
Fiscal and monetary policy act on the same aggregate demand curve, so the combination matters. Expansionary fiscal policy works better when the central bank holds short rates down.
In practice
Monetary policy can also keep a fiscal contraction from causing a recession.
Where people slip
Four combinations exist, two pulling together and two against. Neither source names this; the term is the course's.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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