In what way do tools that fight recessions and tools that fight inflation often conflict with...
Homework Answers
The tools that are used to fight recession are expansionary fiscal and monetary policy (such as increasing government expenditure or purchase of government bonds by central bank which increases money supply) which increases the aggregate demand (Aggregate demand curve shifts rightward) thus leading to higher price level or higher inflation.
Similarly, tools to fight inflation are contractionary monetary or fiscal policy, these policy when applied leads to decrease in the aggregate demand (i.e. aggregate demand curve shifts leftward) thus it reduces inflation or the price level but simultaneously decreases production or employment.
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what way do tools that fight recessions and tools that fight
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