Appropriate fiscal policy depends on the other major tool of governmental stabilization policy:
A)trade policy.
B)tax policy.
C)monetary policy.
D)labor market policy.

Question

Quizplus · Accepted Answer

Fiscal policy and monetary policy are the two major tools of government stabilization policy. Fiscal policy involves changes in government spending and taxation, while monetary policy involves changes in the money supply and interest rates by the central bank. The appropriate combination of fiscal and monetary policy depends on the state of the economy and the specific economic goals being pursued. For example, if the economy is in a recession and interest rates are already low, fiscal policy (increasing government spending and/or cutting taxes) may be more effective than monetary policy in boosting aggregate demand and stimulating economic growth.

Appropriate Fiscal Policy Depends on the Other Major Tool of Governmental