Question

Fiscal policy does not affect the money supply and cannot be used to stimulate spending or curb inflation


True

False

Answer 1

True. Fiscal policy, which involves government spending and tax policies, does not directly affect the money supply. Instead, it influences economic activity by changing the overall level of demand. Monetary policy, implemented by a central bank, is what directly affects the money supply and can be used to stimulate spending or curb inflation. Therefore, the statement is accurate.