What is a key distinction between monetary policy and fiscal policy in economic management?A. Monetary policy involves government spending and taxation, while fiscal policy focuses on interestrates and money supply.B. Monetary policy is set by the central bank, while fiscal policy is determined by the government'sbudget decisions.C. Monetary policy primarily influences employment and economic growth, while fiscal policy mainlyaffects inflation.D. Monetary policy is a short-term strategy, while fiscal policy is a long-term approach to economicmanagement.
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What is a key distinction between
A. Monetary policy involves government spending and
rates and money supply.
B. Monetary policy is set by the central bank, while fiscal policy is determined by the government's
budget decisions.
C. Monetary policy primarily influences employment and
affects inflation.
D. Monetary policy is a short-term strategy, while fiscal policy is a long-term approach to economic
management.
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- a. What are the fiscal policy tools the government can use to expand an economy that is in a recession? Explain the interaction between monetary and fiscal policy?b. Explain how monetary policy is expected to affect investment and aggregate expenditure and discuss its connection with interest rates and output?What is the best combination of fiscal policies and monetary policies for a country like Japan whose price levels are increasing while unemployment is being controlled? a.None of the choices is correct b.Decrease taxes, decrease government spending and decrease money supply c.Decrease taxes, increase government spending and increase money supply d.Increase taxes, decrease government spending and decrease money supplyThe higher the interest sensitivity of investment the a. less effective are both monetary and fiscal policies. b. less effective is monetary policy and the more effective is fiscal policy. c. less effective is fiscal policy and the more effective is monetary policy. d. more effective are both monetary and fiscal policies.
- What is the best combination of fiscal policies and monetary policies for a country like Japan whose price levels are increasing while unemployment is being controlled? a. Decrease taxes, increase government spending and increase money supply b. Decrease taxes, decrease government spending and decrease money supply c. None of these choice is correct d. Increase taxes, decrease government spending and decrease money supply1. Increasing government spending when the economy is in a recession is an example of: A. active monetary policy B. active fiscal policy C. passive monetary policy D. passive fiscal policy 2. Because monetary and fiscal lags are long and variable: A. stronger policies must be used B. successful stabilization policy is completely impossible C. attempts to stabilize the economy are often destabilizing D. policy must be completely passiveA country can use a combination of monetary and fiscal policies to stabilize or control their economy. Choose the most correct statement. O Only monetary policy can affect interest rates O Only fiscal policy can affect unemployment levels O Only monetary policy can affect the level of real GDP O The federal government is more active in monetary policy than fiscal policy 36
- The economy is at full employment, but the government is disappointed with the growth rate of real GDP. It wants to increase real GDP growth by stimulating investment. At the same time, it wants to avoid an increase in the price level. a.Suggest a combination of fiscal and monetary policies that will achieve the government’s objective. b.Which policy would you recommend that the government adopt? c. Explain the mechanisms at work under your recommended policy. d.What is the effect of your recommended policy on the composition of aggregate demand? eWhat are the short-run and long-run effects of your recommended policy on real GDP and the price level?a. The Government of Bangladesh opted for expansionary fiscal policy to fight economic depression. Identify the type of inflation it is expected to create and its impact on the wages. Illustrate the process on the graph. b. Assume the Pakistan’s economy is in recession: Pakistan implements a combination of expansionary fiscal and monetary policy. In the absence of complete crowding out what will be the effect of these policies on each of the following: i. Aggregate demand in Pakistan ii. The price level in Pakistan iii. Interest rates in PakistanThe economy goes into recession. Which of the following lists contains things policymakers could do to try to end the recession? a. Increase the money supply, increase taxes, decrease government spending b. Decrease the money supply, increase taxes, decrease government spending c. Increase the money supply, increase taxes, increase government spending d. Increase the money supply, decrease taxes, increase government spending
- How do transfer payments in the form of unemployment compensation work as an automatic fiscal stabilizer during a recession? a. Transfer payments boost the oscillation in the business cycle. b. Transfer payments decrease the government expenditure that helps in controlling the recession. c. Transfer payments increase government spending that, in turn, decreases disposable income. d. Transfer payments lead to a rise in tax revenue that further boosts the money supply in an economy. e. Transfer payments work as income supports and reduce the effects of the recession.Explain the difference between fiscal policy and monetary policy. What are some of the reasons these macroeconomic policies are used?When the government deliberately alters its level of spending and/or taxes in order to achieve specific national economic goals, it is exercising A. monetary policy. B. discretionary fiscal policy. C. automatic government budgetary policy. D. a laissez-faire policy.