Describe the particular policy mix that accounts for the favorable economic conditions of the late 1990s. Be sure to specify the fiscal and monetary policies pursued during this period


Through a combination of government spending reductions and tax increases in the 1990 to 1997 period, the budget deficit was not only reduced but the federal government actually began to run budget surpluses. The effect of these changes by themselves would be to reduce aggregate demand and increase unemployment and reduce economic growth. However, in addition to contractionary fiscal policy, the Fed was able to pursue an expansionary monetary policy focusing on maintaining relatively low interest rates. This had an expansionary effect on investment spending as well as stimulating economic growth and productivity. This expansionary monetary policy ensured that aggregate demand did not shift inward during this time.

Economics

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In developing countries, the highest returns are from investing in

A) sanitation systems. B) transportation systems. C) defense. D) education.

Economics

Which of the following is true?

a. Kremer argued that with greater population, society would generate more ideas so that growth of real GDP per person could continue. Malthus argued that increasing population would outstrip agricultural production. b. Kremer argued that increases in population would reduce the amount of human and physical capital per worker so that eventually the standard of living would decline. Malthus argued that increases in technology would allow increased output growth so that even with population growth, society would enjoy a higher standard of living. c. Malthus argued that with greater population, society would generate more ideas so that growth of real GDP per person could continue. Kremer argued that increasing population would outstrip agricultural production. d. Malthus argued that increases in population would reduce the amount of human and physical capital per worker so that eventually the standard of living would decline. Kremer argued that increases in technology would allow increased output growth so that even with population growth, society would enjoy a higher standard of living.

Economics

The mental and physical capacity of workers to produce goods and services is known as:

A. labor. B. entrepreneurship. C. value judgment. D. product sensitivity.

Economics

Some economists argue that corporate income taxes are typically not paid by firms, but by

A. the board of directors of the firm. B. the government. C. bond holders. D. stockholders, employees, and consumers.

Economics