Question

Using fiscal and monetary policies to stabilize the business cycle has advantages and disadvantages. Which of the following fiscal and/or monetary policy is NOT paired correctly with its disadvantage?

Answer 1

implementing loose money policies alone may not be enough: monetary policy
higher interest rates tend to restrict growth in the economy: fiscal policy
time lags involved in the government responding to a problem and implementing a solution: fiscal policy
a tax cut during a boom period may cause inflation: fiscal policy

Answer 2

B) higher interest rates tend to restrict growth in the economy: fiscal policy

Fiscal policy is the use of government revenue collection, so mainly taxes
Monetary policy is the process by which the monetary authority of a country controls the supply of money. They usually use rate of interest to boost the economy

Answer 3

That make sense?

Answer 4

Thank you!

Answer 5

Glad to help : )