Question

in what way are monetary and fiscal policies similar? group of answer choices they both target aggregate demand to overcome business fluctuations. neither involves a lag. they are both effective when the economy suffers from real shocks. both are insulated from the political process.

Answer 1

Monetary and fiscal policies are similar as  they both target aggregate demand to overcome business fluctuations.

Option A is correct.

How do monetary and fiscal policies work together?

Fiscal policy affects aggregate demand through changes in government spending and taxation. These factors affect employment and household income, which in turn affect private consumption and investment. Monetary policy affects the amount of money in the economy that affects interest rates and inflation.

Is fiscal policy the same as monetary policy?

Fiscal policy is a policy enacted by the legislative branch of government. It deals with taxation and government spending. Monetary policy is enacted by the government's central bank. Address changes in a country's money supply by adjusting interest rates, reserves, and open market operations.

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