Question

The primary goal of both monetary and fiscal policy focuses on balancing economic growth and:

a) Inflation
b) Government spending
c) Taxation
d) Deficit reduction

Answer 1

The primary goal of both monetary and fiscal policy is to balance economic growth and inflation.

Step-by-step explanation:

The primary goal of both monetary and fiscal policy is to balance economic growth and inflation.

Monetary policy is implemented by the central bank, such as the Federal Reserve in the United States, and involves controlling interest rates and the money supply to influence borrowing, spending, and investment in the economy. By adjusting interest rates, the central bank aims to control inflation and stimulate economic growth.

Fiscal policy, on the other hand, is determined by the government and involves changes in government spending and taxation. When the government increases spending or cuts taxes, it can stimulate economic growth. Conversely, when the government reduces spending or raises taxes, it can slow down the economy and control inflation.