Question

When the economy is expanding too rapidly and inflation and balance of payments problems are being experienced, the appropriate measure to implement is to apply:


expansionary fiscal and monetary policies


restrictive fiscal and monetary policies


expansionary fiscal and restrictive monetary policies


restrictive fiscal and expansionary monetary policies

Answer 1

When the economy is expanding too rapidly and inflation and balance of payments problems are being experienced, the appropriate measure to implement is to apply:

**restrictive fiscal and monetary policies.**

Restrictive policies aim to slow down the economy by reducing government spending and increasing interest rates, which can help control inflation and stabilize the balance of payments.