Which one of the following statements is true?
A) Monetary policy includes adjusting interest rates and determining the level of government taxation.
B) Inflation has little, if any, impact on the economy or the financial markets.
C) Both consumer spending and business investment are key components of the economy.
D) Restrictive fiscal policy tends to increase economic activity.

Question

Quizplus · Accepted Answer

Consumer spending and business investment are both important components of the economy. Consumer spending accounts for a large portion of economic activity and business investment drives innovation and growth. Monetary policy and fiscal policy are separate tools used to manage the economy. Inflation can have significant effects on both the economy and financial markets. Restrictive fiscal policy, which involves reducing government spending and/or increasing taxes, tends to decrease economic activity rather than increase it.

Which One of the Following Statements Is True