Question

Discuss the differences of Fiscal Policy and Monetary Policy. If we are in an economic expansion, what type of policy sh...


Discuss the differences of Fiscal Policy and Monetary Policy. If we are in an economic expansion, what type of policy should be employed to ensure high inflation does not occur, and how would it be carried out?
Transcribed: Discuss the differences of Fiscal Policy and Monetary Policy. If we are in an economic expansion, what type of policy should be employed to ensure high inflation does not occur, and how would it be carried out?

Answer

Fiscal policy and monetary policy are the two main important tools for the government to intervene the market. 

(5) Financial POLICY or fiscal policy- This approach manages the things that influence the public authority income and use. The arrangement is utilized to deal with the inflationary and deflationary circumstances in the economy. It is carried out by the public authority of the country.

 

Financial strategy or monetary policy- This arrangement fundamentally manages the stock of cash in the economy. This is likewise used to control the inflationary and deflationary circumstances. This approach is controlled by Fed or the Central Bank of the country.

 

Financial strategy makes a relatively fast difference. To control the inflationary circumstances , bank rate , CRR , SLR ought to be expanded to lessen the cash supply in economy . This will decrease the interest and the inflationary condition can be controlled.

 

In the event of Fiscal strategy , the expansion in the expense rate and decrease in government spending will likewise cut down the inflationary circumstances.

Thankyou

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