Question : The process of increasing the money supply and/or lowering interest rates in order to stimulate economic growth is known as:
Option 1: Fiscal policy
Option 2: Monetary policy
Option 3: Budgetary policy
Option 4: Industrial policy
Correct Answer: Monetary policy
Solution : The correct answer is (b) Monetary policy.
Monetary policy refers to the process by which a central bank, such as the Federal Reserve in the United States, controls the money supply and interest rates to influence economic growth and stability. When the central bank wants to stimulate economic growth, it may increase the money supply by buying government securities or lowering interest rates. These actions aim to make credit more accessible and cheaper, encouraging borrowing and investment by businesses and individuals. Conversely, during periods of inflation or when the economy is overheating, the central bank may decrease the money supply or raise interest rates to slow down economic activity. Fiscal policy, on the other hand, involves the use of government spending and taxation to influence the economy.
Question : The process of increasing government spending and/or decreasing taxes in order to stimulate economic growth is known as:
Option 1: Fiscal austerity
Option 2: Fiscal stimulus
Option 3: Fiscal responsibility
Option 4: Fiscal consolidation
Question : The government's policy of reducing taxes to stimulate economic growth is known as ____________.
Option 1: Austerity measures
Option 2: Expansionary fiscal policy
Option 3: Contractionary fiscal policy
Option 4: Supply-side economics
Question : The process of collecting taxes in order to fund government expenditures is known as:
Option 4: Taxation policy
Question : The process of allocating government resources in order to meet the goals and objectives of the government is known as:
Question : Which policy aimed to reduce the fiscal deficit and promote fiscal discipline in the 1991 economic policy?
Option 1: Monetary policy
Option 2: Fiscal policy
Option 3: Public debt policy
Option 4: External debt policy
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