As fiscal consolidation takes place,the central bank should

Question

Quizplus · Accepted Answer

When fiscal consolidation occurs, it typically involves reducing government deficits and debt accumulation, often through spending cuts or tax increases. This can lead to lower aggregate demand in the economy. To counteract the potential slowdown and support economic activity, the central bank might decrease the policy rate to make borrowing cheaper, encouraging investment and consumption.

As Fiscal Consolidation Takes Place,the Central Bank Should