Answer to Question #53080 in Other Economics for candy
Monetarists argue that government borrowing as a part of the fiscal policy merely shifts resources from private sector to public sector and doesn’t increase overall economic activity. They argue the increase in government borrowing will increase interest rates and crowds out private sector investment. The good example is the experience of Japan in the 1990s where a liquidity trap was not solved by government borrowing and a ballooning public sector debt.
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