What are the advantages and disadvantages of using expansionary monetary policy or expansionary fiscal policy to restore the economy to full employment in the context of a recession's output gap, versus allowing the economy to adjust itself? a.Quicker process; increase in the price level b.No inflationary pressure; increases the government deficit c.No increase in government deficit, slower process d.No inflationary pressure; slower process
What are the advantages and disadvantages of using expansionary
Fiscal policy refers to the government policy that stabilizes th economy through bring changes in its tax and spending policy.
Fiscal policy is the tool for government to bring the desirable effect in the economy. When the government wants to reduces the inflation level in th economy, it would reduce the money supply in the economy through, increasing tax and or reducing the government expenditure.
Monetary policy refers to the central bank’s policy that bring necessary change in the different rates such as reserve requirement, Fed fund rate and so on, open market operations in order to control the money supply at desirable level which brings stability in the economy.
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