Monetary and fiscal policies have the potential to improve unemployment and GDP during a recession.

Question

Quizplus · Accepted Answer

Both monetary and fiscal policies can help boost economic activity during a recession. Monetary policy involves actions taken by the central bank to control the money supply, interest rates, and the availability of credit. This can be done through measures such as reducing interest rates or engaging in quantitative easing (buying government bonds to inject money into the economy). Fiscal policy involves government spending and taxation, with measures such as increasing spending on infrastructure projects, lowering taxes, or providing direct funding to households to stimulate consumer spending. These policies can increase demand for goods and services, leading to increased economic activity and potentially reducing unemployment and improving GDP.

Monetary and Fiscal Policies Have the Potential to Improve Unemployment