Monetary and fiscal policy are tools to reduce the severity of recessions.

Question

Quizplus · Accepted Answer

Both monetary and fiscal policy can be used to increase economic activity and reduce the severity of recessions. Monetary policy involves actions by the central bank to influence interest rates and the money supply. Fiscal policy involves actions by the government, typically in the form of spending increases or tax cuts, to boost demand and stimulate economic growth. By using these tools, policymakers can help to stabilize the economy during periods of recession.

Monetary and Fiscal Policy Are Tools to Reduce the Severity