Monetary policy is ____________ efficient than fiscal policy because _____________. less; fiscal policy is conducted by...
Monetary policy is ____________ efficient than fiscal policy because _____________.
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less; fiscal policy is conducted by elected officials |
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more; of central bank independence |
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more; of political institutions |
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less; of the long run neutrality of money |
Homework Answers
Monetary policy is less efficient than fiscal policy because of the limitations of money to influence real variables in the long run.
Due to the neutrality of money in the long run, the monetary policy might not be very effective in driving the real output of the economy in the long run. However, in the short run, it can be used effectively to tackle a slow down to some extent.
Independence of Central Bank is a mere decisive factor in deciding who takes such monetary policy decisions. It has got nothing to do with the actual efficacy of the policy as a tool to tackle the economy. Similar are the other two given options of elected officials and the political institutions. The efficacy of a policy lies in the fact up to which such a policy can handle and bring out positive changes as required in the economy rather than who is taking policy decisions.
Ans: less; of the long run neutrality of money
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Monetary policy is ____________ efficient than fiscal policy
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