Question

Now that you know all about both Fiscal and Monetary policies, who do you think could do a better job in rescuing us from a recession? Justify your decision!

Answer 1

In orde to rescue from recession, fiscal policy is more effective than monetary policy because at that time government is able to pay for new schemes, create more employment directly than before using fiscal policies rathar than encouraging the business indirect which happens in monetary policy. Moreover fiscal policy is financed by government borrowing and by selling the bonds to the investors which means that government spending will automatically stimulate the economy and also it will help in increasing employment and as a result resources will be back to its productive use. Even Keynes also told in his theory that Expansionary fiscal policy should be used in order to rescue a country from recession