Economics · Macroeconomics
Which of the following is the primary difference between fiscal policy and monetary policy?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Fiscal policy is conducted by central banks, while monetary policy is carried out by the government.
- 2Fiscal policy involves control of the money supply, while monetary policy involves government spending decisions.
- 3Fiscal policy and monetary policy are interchangeable terms representing the same administrative actions.
- 4Fiscal policy involves the government's use of taxation and spending, while monetary policy involves the central bank's control of interest rates and money supply.✓
Correct answer
Fiscal policy involves the government's use of taxation and spending, while monetary policy involves the central bank's control of interest rates and money supply.
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