ECONOMICS
FISCAL POLICY
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
a decrease in the interest rate
|
|
|
a decrease in the rate of value added tax
|
|
|
an increase in the power of trade unions
|
|
|
an increase in the standard rate of income tax
|
Detailed explanation-1: -Expansionary monetary policy is when a central bank uses its tools to stimulate the economy. That increases the money supply, lowers interest rates, and increases demand. It boosts economic growth. It lowers the value of the currency, thereby decreasing the exchange rate.
Detailed explanation-2: -Expansionary policy also known as loose fiscal policy increases the force of loanable finances in the economy. As a result, the interest rates drop in an economy.
Detailed explanation-3: -Monetary Policy’s Impact on Interest Rates It is true that expansionary monetary policies (or “easy money”) usually lead to a temporary decrease in the level of interest rates.
Detailed explanation-4: -Expansionary Monetary Policy Also known as loose monetary policy, expansionary policy increases the supply of money and credit to generate economic growth. A central bank may deploy an expansionist monetary policy to reduce unemployment and boost growth during hard economic times.