Section A

True or False: Fiscal policy involves the central bank manipulating interest rates to control inflation.

Answer options:

True

False

Only in developing economies

Only during a recession

How to approach this question

Recall the difference between Fiscal (Government tax/spend) and Monetary (Central bank interest rates/money supply).

Full Answer

B.False✓ Correct

Fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy. Monetary policy is the process by which a central bank manages the money supply and interest rates.

Common mistakes

Confusing fiscal and monetary policy.

Question 30 All questions Question 32

Practice the full ACCA BT — Business & Technology Practice Exam 3

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