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    Question

    Fill in the Blanks: ________________ is

    typically implemented by a central bank, while ______________ decisions are set by the national government.
    A Fiscal Policy, Fiscal Policy Correct Answer Incorrect Answer
    B Fiscal Policy, Monetary policy Correct Answer Incorrect Answer
    C Fiscal Policy, Economic Policy Correct Answer Incorrect Answer
    D Monetary Policy, Monetary policy Correct Answer Incorrect Answer
    E Monetary policy, Fiscal Policy Correct Answer Incorrect Answer

    Solution

    Monetary policy involves changing the interest rate and influencing the money supply. Fiscal Policy involves the government changing tax rates and levels of government spending to influence aggregate demand in the economy. Both monetary and fiscal policy may be used to influence the performance of the economy in the short run.

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