APFIVE Comparing Expansionary Fiscal and Monetary Policy
Which of the following best describes a similarity between expansionary fiscal policy and expansionary monetary policy in the short run?
A
Both policies focus solely on increasing government spending with no impact on taxes or the money supply.
B
Both policies work by directly lowering interest rates without affecting aggregate demand.
C
Both policies primarily aim to lower the long-run aggregate supply.
D
Both policies shift aggregate demand to the right, increasing real GDP and reducing unemployment.
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