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? 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 1

"fiscal policy a tax cut during a boom period may cause inflation" is not connected. Inflation can occur independently of fluctuations in the tax rate.