The government possesses the tools necessary to influence the output level in the short run through use of monetary and fiscal policy is a true statement.
Governments affect the economy via altering tax rates and types, spending amounts and types, and borrowing amounts and types. Both directly and indirectly, governments have an impact on how resources are employed in the economy.
Open-market operations, the discount rate, and reserve requirements are the three main tools the Fed uses to control the amount of money in circulation.
Therefore, one should know that taxes and spending are the two primary fiscal policy instruments. By dictating how much money the government must spend in specific sectors and how much money people should spend, taxes have an impact on the economy. For instance, the government may lower taxes to encourage consumer spending.
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the government possesses the tools necessary to influence the output level in the short run through use of monetary and fiscal policy. however, there is some debate regarding whether the government should attempt to stabilize the economy.? True or false.
