Money Supply Control

What is fiscal policy?

• Fiscal policy is the use of government spending to influence the economy.

• Fiscal policy refers to the management of private finances by individuals.

• Fiscal policy involves the regulation of interest rates by the government.

• Fiscal policy is the use of government spending and taxation to influence the economy.

Define monetary policy.

• Monetary policy refers to the regulation of physical currency circulation only.

• Monetary policy involves setting government spending levels to influence the economy.

• Monetary policy focuses on controlling interest rates in the stock market.

• Monetary policy is the actions taken by a central bank to control the money supply and achieve macroeconomic goals.

How does fiscal policy affect the economy?

• Fiscal policy affects the economy by determining the outcome of sports events.

• Fiscal policy affects the economy by influencing aggregate demand through government spending and taxation decisions.

• Fiscal policy affects the economy by regulating international trade agreements.

• Fiscal policy affects the economy by controlling the weather patterns.

Explain the tools of monetary policy.

• Open market operations, reserve requirements, and the discount rate.

• Fiscal policy, inflation targeting, quantitative easing

What is the goal of expansionary fiscal policy?

• To maintain a balanced budget without any changes

• To stimulate economic growth by increasing government spending and/or cutting taxes.

• To reduce government spending and increase taxes

• To slow down economic growth by decreasing government spending

Describe the impact of contractionary monetary policy on inflation.

• Contractionary monetary policy leads to hyperinflation

• Contractionary monetary policy has no impact on inflation

• Contractionary monetary policy increases inflation by lowering interest rates

• Contractionary monetary policy can help reduce inflation by decreasing demand for goods and services through higher interest rates and reduced spending.

What are the differences between fiscal and monetary policy?

• Fiscal policy focuses on controlling the money supply, while monetary policy focuses on taxation.

• Fiscal policy is set by the government and involves government spending and taxation, while monetary policy is set by the central bank and involves controlling the money supply and interest rates.

• Fiscal policy involves setting interest rates, while monetary policy involves government spending.

• Monetary policy is controlled by the government, while fiscal policy is controlled by the central bank.

How does the government implement fiscal policy?

• By adjusting government spending and taxation

• By reducing unemployment benefits

• By printing more money

• By increasing interest rates

What role does the Federal Reserve play in monetary policy?

• Controls money supply, sets interest rates, regulates banks

• Regulates international trade, controls government spending, manages public debt

• Issues currency, enforces tax policy, manages trade agreements

• Oversees stock market, sets fiscal policy, monitors inflation

Why is controlling money supply important?

• To promote international trade

• To increase government spending

• To encourage savings

• To regulate inflation, interest rates, and overall economic stability.