Select the answer that makes each statement correct. When the government changes either its spending or tax policy to pursue economic objectives, it has changed its financial policy. political policy. monetary policy. contractionary policy. expansionary policy. fiscal policy. Changing the amount of money in circulation to pursue economic objectives changes the

Expansionary monetary policy : these are polices taken in order to increase money supply. When money supply increases, aggregate demand increases. reducing interest rate and open market purchase are ways of carrying out expansionary monetary policy

Contractionary monetary policy : these are policies taken to reduce money supply. When money supply decreases, aggregate demand falls. Increasing interest rate and open market sales are ways of carrying out contractionary monetary policy

Fiscal policies are deliberate steps taken by the government to stimulate the economy in order to cause the economy to move to full employment and price stability more quickly than it might otherwise. The tools of fiscal policy are either taxes and government spending

Fiscal policies can either be expansionary or contractionary

Expansionary fiscal policy is when the government increases the money supply in the economy either by increasing spending or cutting taxes.

Contractionary fiscal policy is when the government reduces the money supply in the economy either by reducing spending or increasing taxes.