Q: To reach the full employment level in the goods market, should expansionary or contractionary monetary or fiscal policy be implemented?
Good day, some help (with steps) on the following will be much appreciated!
To reach the full employment level in the goods market, should expansionary or contractionary monetary or fiscal policy be implemented?
As far as I understand, both expansionary monetary and fiscal policy will be applicable here. However, in order to follow, for example, expansionary fiscal policy, Government will spend more and increase the budget deficit, won't it? The BOP will also be affected...These are things which can prevent full employment from being reached. Please help me understand how this would work.
Thanks for your help!