ExpertEasy1 markMultiple Choice
ACCA · Question 33 · Syllabus A: Business organisation and its external environment
True or False: Fiscal policy involves the central bank manipulating interest rates to control the money supply.
True or False: Fiscal policy involves the central bank manipulating interest rates to control the money supply.
Answer options:
A.
True
B.
False
How to approach this question
Differentiate between government actions (taxes/spending) and central bank actions (interest rates).
Full Answer
B.False✓ Correct
Fiscal policy is the use of government spending and taxation 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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