ExpertEasy1 markMultiple Choice
ACCA · Question 31 · Syllabus A: The business organisation and its external environment
Fiscal policy refers to the government's use of interest rates and the money supply to influence the economy.
Fiscal policy refers to the government's use of interest rates and the money supply to influence the economy.
Answer options:
A.
True
B.
False
C.
Only applies to developing nations
D.
Only applies to inflation
How to approach this question
Recall the difference between Fiscal (tax/spend) and Monetary (interest rates/money supply) policy.
Full Answer
B.False✓ Correct
Fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy. The manipulation of interest rates and money supply is known as Monetary policy.
Common mistakes
Mixing up fiscal and monetary policy.
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