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Practice mode Monetary, Fiscal And Incomes Policy, And Inflation

Through fiscal policy, governments pursue goals for output, employment growth and price stability by varying which two things?

Correct answer B. Tax rates, government spending

Explanation

Fiscal policy uses the government budget, changing tax rates and public spending to influence aggregate demand, whereas interest rates belong to monetary policy.

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Question 04 Monetary, Fiscal And Incomes Policy, And Inflation

Central banks in developing countries (LDCs) generally have less effect on expenditure and output than in developed countries because of: I. an externally dependent banking system; II. a poorly developed securities market; III. a low share of demand deposits in the money supply; IV. investment and employment being relatively insensitive to monetary policy. Which apply?

Correct answer B. All of I, II, III and IV

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