Blyts-_
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Report Thread starter 6 years ago
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"Debate the view that monetary policy is a far more effective form ofdemand management than fiscal policy"

What higher level evaluation points could be made for this question?
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Schmitzel
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here are my personal suggestions, sorry if there not any good lol

-Depends upon the state of the economy, monetary policy, especially in the case of the UK now with interest rates at 0.5% could have very little effect as they can't drop much further. / or you could say if the economy was in a liquidity trap then fiscal policy is the only option, as monetary policy becomes ineffective.

-Fiscal policy greater impact in the short term. Interest rate cuts could take time to feed through in the economy. E.g. Those of fixed rate mortgages won't be effected, and in the case of the UK, that's a pretty large population (I think).

-Depends on what the government spends the money on.

-Crowding out (I would say this is analysis, not evaluation)

-Depends on confidence. If for say the future prospects of the economy are really bad, and the government cuts income tax, due to low confidence individuals may save the tax cut rather than spend it.
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