BUSINESS ADMINISTRATION
BUSINESS POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Increase government spending
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Decrease government spending
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Increase taxes
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Decrease taxes
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Detailed explanation-1: -The most important and commonly used method to control inflation is monetary policy of the Central Bank. Most central banks use high interest rates as the traditional way to fight or prevent inflation.
Detailed explanation-2: -Fiscal policy that increases aggregate demand directly through an increase in government spending is typically called expansionary or “loose.”
Detailed explanation-3: -Unfortunately, in order to reduce unemployment, the primary negative effect of expansionary policy is inflation. An increase in the money supply can lead to inflation if it outpaces the growth of the economy.
Detailed explanation-4: -It is implemented to discourage savings and increase consumer spending. Such low or negative rates are aimed at increasing inflation as it promotes increased spending and lower savings.