Fiscal policy and monetary policy are:
A) both primarily designed to curb imports and stimulate exports.
B) regarded as equally effective and desirable by virtually all economists.
C) designed to affect the level of economic activity by influencing the level of total spending.
D) desirable because they have no effect on leakages from, or injections into, the spending stream.

Question

Quizplus · Accepted Answer

Fiscal policy (government spending and taxation) and monetary policy (central bank actions affecting interest rates and the money supply) are both aimed at influencing the level of economic activity by affecting total spending in the economy. They are tools to manage economic growth, control inflation, and influence employment levels, rather than being focused primarily on trade balances or being universally agreed upon in terms of effectiveness.

Fiscal Policy and Monetary Policy Are