Asked Oct 14, 2019

When is it appropriate to use monetary and fiscal policy to stimulate or stabilize the economy?

please also include the reference for this question. 



Expert Answer

Step 1

The government can stabilize the economy with the help of Monetary and Fiscal Policy.

Fiscal Policy: It refers to the decision of the government regarding spending and taxation.

Monetary Policy: It refers to the decision of the central bank regarding the amount of money supply in the economy.

Step 2

The use of fiscal policy is appropriate when the government wants to stimulate growth in the economy. Under fiscal policy government can increase the spending on goods and services and this will increase the demand for goods and services in the economy and to meet increased demand for goods and services production must increase and to produce mor...

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in




Related Economics Q&A

Find answers to questions asked by student like you
Show more Q&A

Q: The Acmeville Metropolitan Bus Service currently charges $0.88 for an all-day ticket, and has an ave...

A: PED (Price elasticity of demand) depicts the responsiveness of change in the quantity demanded as a ...


Q: In five years, a salary of $56,000 per year with a 55% growth due to cost-of-living adjustment in th...

A: The salary of the individual is given to be $56,000 per year and the growth is said to be of 55 perc...


Q: To raise money for a new student union, the Student Snack 2.25 Bar charges a tax of $0.75 on each be...

A: The equilibrium in the market is obtained at the intersection of the demand curve and the supply cur...


Q: 1.

A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If y...


Q: 5. Calculating tax incidence Suppose that the U.S. government decides to charge beer producers a tax...

A: The amount of tax on a case is calculated as follows.


Q: Solve the cake and pie unit income of $23 is spent

A: The table for cake is completed below: Price of cake is $5


Q: Suppose students like to eat pepperoni pizza, bean and rice burritos, and hamburgers (made from beef...

A: The correct option for the above-mentioned question is option (c).


Q: 1. Which of the following is not included in the consumption component of GDP? Group of answer choic...

A: 1. The consumption component of GDP includes consumption of services, consumption of durable goods a...


Q: Question. Using the table below, answer the questions that follow it.              A    B  C  D   EP...

A: a)The production possibility curve is a graphical representation of combination of two goods or serv...