The two major policy tools available for controlling economic activity are ______.

Question

Quizplus · Accepted Answer

The two major policy tools for controlling economic activity are monetary and fiscal policies. Monetary policy is controlled by the central bank, which adjusts interest rates and money supply in order to influence inflation, unemployment, and economic growth. Fiscal policy involves government spending and taxation, which can be used to stimulate or slow down economic activity. While taxes are included in fiscal policy, taxing policies alone are not a major tool for controlling economic activity. Credit policies are also a component of monetary policy, and interest rates are used in both monetary and fiscal policies.

The Two Major Policy Tools Available for Controlling Economic Activity