Both fiscal and monetary policies focus on____________________?
Correct answer: B. the demand side of the market
- A. the supply side of the market
- B. the demand side of the market
- C. both sides of the market
- D. the global market
Explanation
Fiscal policy changes government spending and taxation, while monetary policy changes interest rates and the money supply. In the standard short-run model, both primarily influence aggregate demand.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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