How come under a MONETARY Expansion Interest rates go down and under a FISCAL Expansion interest rates go up?

Question by Benji A: How come under a MONETARY Expansion Interest rates go down and under a FISCAL Expansion interest rates go up?
How come under a MONETARY Expansion Interest rates go down and under a FISCAL Expansion interest rates go up?

I understand that when there is a Monetary expansion the money supply goes up thats why interest rates go down… but during a fiscal expansion the money supply goes up also.. so why do interest rates go up under a fiscal expansion?

Best answer:

Answer by Hubris252
Interest rates don’t go down during a fiscal expansion despite the increase in the money supply because the government undertakes fiscal expansions through deficit spending. The government’s borrowing increases the demand for loanable funds driving the price, interest rate, up, countering any downward pressure from the increase in the money supply.

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