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Chapter 12: Problem 4

Fiscal policy and monetary policy are (LO1) a) different means used to attain different goals b) different means used to attain the same goals c) the same means to attain the same goals d) the same means to attain different goals

Short Answer

Expert verified
b) different means used to attain the same goals

Step by step solution

01

Understand Fiscal Policy

Fiscal policy refers to the use of government spending and taxation to influence the economy. It is managed by the government and can be used to either stimulate economic growth, control inflation, or achieve other macroeconomic goals.
02

Understand Monetary Policy

Monetary policy is the management of money supply and interest rates, which is conducted by central banks (like the Federal Reserve in the U.S.). It aims to stabilize the economy by controlling inflation and maintaining low levels of unemployment.
03

Analyze the Relationship Between Fiscal and Monetary Policy

Fiscal and monetary policies are different tools used by the government and central bank, respectively, to achieve macroeconomic goals. While they operate through separate means (government spending/taxation vs. money supply/interest rates), they ultimately both strive to create a stable, growing economy.
04

Select the Correct Option

Based on the understanding of fiscal policy and monetary policy's concepts and their relationship, the correct answer is: b) different means used to attain the same goals

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Most popular questions from this chapter

Which statement is true? (LO9, 11) a) About one-third of the national debt is rolled over (or refinanced) every year. b) The national debt is doubling every 10 years. c) Unless we balance the budget within the next five years, the United States stands a good chance of going bankrupt. d) None of these statements is true.

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