Senator Spendital made a speech deploring the continuous deficits in the federal budget. He is proposing an increase in tax rates to raise more revenue for the government and thus gradually reduce the size of the national debt over a period of several years. The strategy Senator Spendital is proposing is a common type of monetary policy.

Question

Quizplus · Accepted Answer

Senator Spendital's proposal is actually a form of fiscal policy, as it involves changes to government spending and taxation in order to influence the economy. Monetary policy, on the other hand, involves actions taken by the central bank (such as adjusting interest rates) to regulate the money supply and credit conditions in the economy.

Senator Spendital Made a Speech Deploring the Continuous Deficits in the Federal