What advantages does monetary policy have over fiscal policy?
What will be an ideal response?
Monetary policy is more flexible and less political than fiscal policy. While fiscal policy is slowed by the legislative process, monetary policy can be quickly discussed and implemented by the Federal Reserve. And while political concerns can hinder appropriate fiscal policy, the Federal Reserve is largely insulated from political matters.
You might also like to view...
When a business is set up as a partnership, the owners of the business face limited liability
Indicate whether the statement is true or false
A financial crisis occurs when an increase in asymmetric information from a disruption in the financial system
A) causes severe adverse selection and moral hazard problems that make financial markets incapable of channeling funds efficiently. B) allows for a more efficient use of funds. C) increases economic activity. D) reduces uncertainty in the economy and increases market efficiency.
The real balances effect suggests that
A. when prices are higher, you buy fewer because the marginal utility of a good is diminishing. B. when prices are higher, you buy more. C. when prices are higher, your buying power is less, so you buy less. D. when prices are higher, you buy less of what you originally wanted and use something else instead.
One reason that "near-monies" are important is because:
A. they do not reflect the level of consumer spending, but they have a critical impact on saving and investment in the economy. B. they simplify the definition of money and therefore the formulation of monetary policy. C. credit cards synchronize one's expenditures and income, thereby reducing the cash and checkable deposits one must hold. D. they can be easily converted into money or vice versa, and thereby can influence the stability of the economy.