What is the difference between the effects of fiscal policy and the effects of monetary policy?
A) Monetary policy can affect long-term growth while fiscal policy cannot.
B) Fiscal policy can affect the short-term price level while monetary policy cannot.
C) Fiscal policy can affect long-term growth while monetary policy cannot.
D) Monetary policy can affect the short-term level of output while fiscal policy cannot.

Question

Quizplus · Accepted Answer

Fiscal policy, through government spending and taxation, can influence long-term economic growth by affecting aggregate demand and supply-side factors like infrastructure and education. Monetary policy primarily influences short-term economic variables like interest rates and inflation.

What Is the Difference Between the Effects of Fiscal Policy