Problem:
At present, the extent of our economic complexities has caused the economic policymakers to select fiscal and monetary policies which are both expansionary. Though many economists consider this mix of policy is suitable to our current circumstances, there are concerns of problems that these policies may create. Now that you’ve become a knowledgeable and critical consumer of financial and economic affairs, I want you to sort by the statements below to measure their plausibility given the concepts and models we have discussed this semester. If you think the statements below are plausible, you must describe why you do so using ideas from the class. If you see them as improbable, you must argue why given the concepts discussed this semester.
a. These policies will confine private, business investment spending given their impact on credit and interest rates, thus limiting prospect long-term economic growth.
b. These policies will likely cause the weakening in American dollar as a result.