📚 Learning Guide
Fiscal Policy and Inflation Control
hard

Fiscal policy is to inflation control as monetary policy is to what?

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Learning Path
Learning Path

Question & Answer
1
Understand Question
2
Review Options
3
Learn Explanation
4
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Choose the Best Answer

A

Interest rate stabilization

B

Reducing government spending

C

Employment levels

D

Trade deficits

Understanding the Answer

Let's break down why this is correct

Answer

Fiscal policy is mainly about how the government uses its spending and taxes to influence the economy. When we talk about inflation control, fiscal policy can help by reducing spending or increasing taxes to cool down an overheating economy. On the other hand, monetary policy, which is controlled by a country's central bank, focuses on managing the money supply and interest rates to achieve economic goals. So, while fiscal policy is to inflation control, monetary policy is to economic growth. For example, if the economy is growing too fast and causing inflation, the central bank might raise interest rates to slow down borrowing and spending, helping to stabilize prices.

Detailed Explanation

Monetary policy helps control inflation by adjusting interest rates. Other options are incorrect because Some might think monetary policy is about spending; People may confuse monetary policy with job creation.

Key Concepts

Fiscal Policy
Monetary Policy
Inflation Control
Topic

Fiscal Policy and Inflation Control

Difficulty

hard level question

Cognitive Level

understand

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