Social Studies, 05.12.2019 22:31 shamayajohnsonsh5
Two years back, the republic of terbia, a developed economy, experienced a massive boom in the information technology (it) industry. the rapid expansion of credit to the firms in this industry resulted in a significant increase in employment and prices in the economy. however, due to overvaluation and speculation in the market, stock prices of these firms fell sharply. it being one of the most important sectors, this downturn affected the economy adversely, leading to a recession. alicia white, an industry expert, suggests that expansionary monetary policy by the central bank is necessary to induce greater spending in the economy. however, jaime russell, a teacher at a community college, disagrees. according to him, increasing the supply of money would not . the only possible impact of a fall in the interest rate would be an increase in aggregate supply. this, in turn, will reduce prices and profits further. instead, the government should use expansionary fiscal policies to boost aggregate demand. which of the following, if true, will support jaime's view that an expansionary fiscal policy would be ideal in the given situation?
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