Fiscal & Monetary Policies

Question 1

What is the budget balance?

Answer 1

The budget balance is the difference between government spending and revenue over the financial year.

Question 2

What is fiscal policy?

Answer 2

Fiscal policy is the use of taxation and public expenditure to manage the level of economic activity

Question 3

What is monetary policy?

Answer 3

Monetary policy is controlling the amount of money and/or interest rates within the economy in order to achieve the desired level of economic activity.

Question 4

What are interest rates?

Answer 4

Interest rates are the reward for saving or the price of borrowing.