Also if you can help me with 2 thru 15 Know about the transactions demand and th

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Also if you can help me with 2 thru 15
Know about the transactions demand and the asset demand for money - Know who sets the supply of money. Know the monetary policy tools and know how they would be applied during a recession or during inflation. -Be able to define tight money policy and easy money policy and describe their impact on interest rates and investment spending. -Know the definitions and the impact of "federal fund rate', "discount rate", and 'prime rate" Know the strengths of monetary policy compared to fiscal policy. . Be able to define /describe: * Fiscal policy" Discretionary Fiscal policy 1-know how to use discretionary fiscal policy in a recession and inflation. L Know the probiems associated with applying fiscal policy.

Explanation / Answer

20. Strength of Monetary Policy as compared to the Fiscal Policy

Monetary policy is the policy through which the central bank of a country controls the money supply and interest rates. Fiscal policy deals with the government income and expenses. Fiscal policy does not directly influence the interest rate. However, the Monetary policy can influence the interest rate, which can influence aggregate demand, investment, unemployment, etc. For example, when the economy slows down, the central bank can increase the money supply to lower the interest rate, which in turn increases borrowing, consumption, and investment. This stimulates the economy. Fiscal policy cannot influence the interest rate in this way, therefore, cannot influence consumption and investment.

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