Question

Monetary and fiscal policies:Select one:a. can reduce the severity of economic busts.b. have been proven to be ineffective and are no longer used during recessions.c. only work during times of rapid inflation.d. are tools used during economic booms but not economic busts.Clear my choice

Answer 1

Answer:

The correct answer is letter "A": can reduce the severity of economic busts.

Explanation:

Fiscal and Monetary Policies provide the government and the Federal Reserve (Fed) with two powerful tools to regulate the economy. Fiscal Policy refers to the economic impact of a government's spending and taxing policies. Monetary Policy, which the Fed controls, can also slow or ignite the economy. Ultimately its goal is to create cash built-up in the banking system.