through expansionary tools. This occurs because demand for goods and services increases, which leads to a rise in prices and output. What Are the Common Goals of Monetary and Fiscal Policy?

Monetary policy is how central banks influence the economy by raising or lowering the money supply. This is in contrast to fiscal policy ... First, as expansionary monetary policy can boost ...

But this is not a problem as far as macroeconomic conditions are concerned — Krugman stresses —, because monetary policy can ... undermine the expansionary impact of the fiscal intervention.