Why Is Monetary Policy Used To Fight Inflation Rather Than Fiscal Policy? If we use fiscal policy, it will involve higher taxes, lower spending. … This is why most economies have relied on monetary policy for the ‘fine-tuning’ of the economy. Monetary policy. Raising interest rates is usually quite effective in reducing inflationary pressures. Why
What Is A Lasting Effect Of Expansionary Monetary Policy? Expansionary monetary policy increases the money supply in an economy. The increase in the money supply is mirrored by an equal increase in nominal output, or Gross Domestic Product (GDP). In addition, the increase in the money supply will lead to an increase in consumer spending.
How Does Purchasing Power Affect The Economy? When a currency’s purchasing power decreases due to excessive inflation, serious negative economic consequences arise, including rising costs of goods and services contributing to a high cost of living, as well as high interest rates that affect the global market, and falling credit ratings as a result. How