How can you expand income and employment while keeping interest rates constant.?

Answer 1

Since most of your answers here will come from a neo-classical perspective, I"ll offer an alternative:

If you follow Friedman's understanding (basically, Chicago School), any intervention is fruitless and short-lived, and not likely to have any measurable effect until the problems of concern have long since passed. Furthermore, any efforts to boost output and decrease unemployment would only cause inflation which, by the Fischer effect, will boost nominal interest rates (the ones you and I use), before output and unemployment eventually return to their long-run natural equilibrium.

Assuming, of course, we're STARTING at the long-run natural equilibrium.

Answer 2

The short answer is you really can't.

The argument can be made that some expansion will happen that wouldn't have happend if rates were instead raised, but that's not a true "expansion," instead just the natural acceleration of the economy. For them to truly expand (or have a chance to) you have to cut rates.