True or False: In the context of a government managing a nation's economy, adjusting the base interest rate to control inflation is an example of fiscal policy.

Answer options:

True

False

How to approach this question

Remember the difference: Fiscal = Tax & Spend (Government). Monetary = Interest rates & Money supply (Central Bank).

Full Answer

B.False✓ Correct

Fiscal policy relates to government revenue collection (taxation) and expenditure (spending). Monetary policy relates to the management of money supply and interest rates.

Common mistakes

Confusing fiscal and monetary policy.

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Practice the full ACCA BT — Business & Technology Practice Exam 6

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