ExpertEasy1 markMultiple Choice
ACCA · Question 31 · Business & Technology
Section A
True or False: Fiscal policy involves the central bank manipulating interest rates to control inflation.
Section A
True or False: Fiscal policy involves the central bank manipulating interest rates to control inflation.
Answer options:
A.
True
B.
False
C.
Only in developing economies
D.
Only during a recession
How to approach this question
Recall the difference between Fiscal (Government tax/spend) and Monetary (Central bank interest rates/money supply).
Full Answer
B.False✓ Correct
Fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy. Monetary policy is the process by which a central bank manages the money supply and interest rates.
Common mistakes
Confusing fiscal and monetary policy.
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