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- Fiscal Policy or Monetary policy which one is more efficient
- i think fiscal policy ismore efficient
- Yeah and monetary policy which is controlled bt the central bank involves managing interest rates and the money supply to influence borrowing, spending, and investment Monetary can be more flexible and quicker to implement compared to fiscal
- Well I think monetary policy is more efficients
- Actually both fiscal and monetary policy can be effective in managing the economy, but their effectiveness can vary depending on the specific circumstances Fiscal policy involving gov spendinf and taxation has direct impact on economyby influencing aggregate demand
- open market operations involves buying and selling if gov securities it injects money into economy this increases supply of loanable funds making it easier for businesses and individuals to borrow money this results in lower interest rates and stimulates borrowing investements
- Impact of tool on loanable funds market
- One important toolis the centrals bank monetary policy which includes OMO and discount rate
- Discount rate is the interest rate that banks pay when they borrow from the central bank if bank lowers interest rate it becomes cheaper for banks to borrow money this also increases suplly loanable funds and encourages borrowing investment
- In the AD/AS model, Aggregate Demand represents the total spending in the economy, while aggregate supply represents total production of goods and services theavailability of loanable funds influence both sides
- Impacts of loanable funds on AD/AS
- When there is an increase in loanable funds it can lead to lower interest rates encouraging bowrrowing and investements by businesses the increase boost aggregate supply by stimulating production and exoaning capacity resulting in overall level of ouput in the economy can increase leading to rightward shift in aggregate supply curve. INcreasing and bowrrowing has positive impact on demand it leads to rightward shift
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