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  • Can you explain the difference between fiscal and monetary policy?
  • Fiscal controls taxes and spending, Monetary controls discount rate, open markets and reserve requirements
  • So expansionary then means the output goes up!
  • So what is the government actions currently causing?
  • Tax code means people have more money, spending goes up and prices follow going up as well
  • Well govt. spending has gone up which equals prices going up 
  • The economy is good meaning the manufacturing and retail goes up, but home sales slow down and there's a labor shortage, beginning inflation
  • So do you know how the Texas economy is doing?
  • What about the united state's economy?
  • It's good, economic activity is up, unemployment is down, federal funds rate is up because of inflation
  • So what about contractionary output?
  • contractionary output is down
  • Would that mean fiscal and monetary policy contradict or support each other?
  • They contradict each other.
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