The Other Partner in Stabilization Policy

Our multiplier analysis has,focused primarily on fiscal policy as a tool for stabilizing the economy. But Keynesian economists emphasize that fiscal policy only one of the tools that can be used in business cycle management. The government has) another equally powerful weapon in monetary policy. Although monetary policy works quite differently, as we will see in the next two chapters, it has many advantages as a policy for combating unemployment and inflation.

Like two locomotives on a train-sometimes  pulling in one direction and sometimes in different directions monetary and fiscal policies are powerful engines for affecting output, employment and prices in the short run.

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