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?

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

Answer 1

I think the answer is C

Answer 2

The correct answer is B.) higher interest rates tend to restrict growth in the economy: fiscal policy.

Out of all the choices, the above fiscal policy is not paired correctly with its disadvantage. So the correct answer is B.) higher interest rates tend to restrict growth in the economy: fiscal policy.