In turn, this generates a contractionary effect on output. Thus, unless the government has plenty of room to finance an increase in aggregate demand without affecting the interest rate much ...
Such policies are typically used to boost productivity and the economy. Conversely, the policy is contractionary when government spending decreases or taxes rise. Contractionary policies might be ...
Preceding each of the stagflations was a period of contractionary monetary policies. We can see this by observing rising fed funds rates prior to each stagflation. The fed funds rate, the interest ...