What is one of the advantages of monetary policy over fiscal policy? 1) its control over the size of Federal budget deficits 2) the quickness with which it can be used 3) the opportunity for broad political influence 4) It can guarantee an expansion of aggregate demand when needed.

What is one of the advantages of monetary policy over fiscal policy? 1) its control over the size of Federal budget deficits 2) the quickness with which it can be used 3) the opportunity for broad political influence 4) It can guarantee an expansion of aggregate demand when needed.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter14: Macroeconomic Policy: Tradeoffs, Expectations, Credibility, And Sources Of Business Cycles

Section: Chapter Questions

Problem 5E

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Concept explainers

Inflation and Purchasing Power Theory

In economic terms, Inflation refers to the increase in the costs of various commodities which are used in daily lifestyle like food, clothes, transport, etc. over a specific time. It may lead to a fall in the purchasing power of the people and also affects the exchange rate of the currency because of the price increase. As the purchasing power falls the unit of the currency in the economy falls. When the prices of the commodities are decreased, then the purchasing power of the consumers will rise, then it will lead to deflation and changes the currency of the base economy to that of the foreign economy which will lead to change in exchange rates.

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What is one of the advantages of monetary policy over fiscal policy?
1) its control over the size of Federal budget deficits
2) the quickness with which it can be used
3) the opportunity for broad political influence
4) It can guarantee an expansion of aggregate demand when needed.

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