alleryStart learning →Which two tools does a government mainly use to reach its macroeconomic goals?
ATrade policy and industrial policy
BWage policy and employment policy
CMonetary policy and fiscal policy
DPricing policy and competition policy
Answer & Solution
Correct answer: C. Monetary policy and fiscal policy
1. Government tries to guide the economy to a balance of growth, employment and price stability.
2. The two main tools it uses are monetary policy and fiscal policy.
3. Monetary policy works on the money in circulation and on interest rates.
4. Fiscal policy works through taxation and government spending.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 1 "Understanding Economic Systems and Business", section 1.5 Achieving Macroeconomic Goals_
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