Compared to monetary policy, fiscal policy leads to
A)more efficient outcomes.
B)larger changes in output.
C)more private spending relative to public.
D)more stable prices.
E)the price level fluctuates more in the short run.

Question

Quizplus · Accepted Answer

Fiscal policy involves changes in government spending and taxation, which can directly impact demand in the economy. This can lead to larger changes in output compared to monetary policy, which primarily affects interest rates and can indirectly impact demand. However, fiscal policy can also lead to less stable prices and it may be less efficient than monetary policy in the long run.

Compared to Monetary Policy, Fiscal Policy Leads to