Question

When deciding whether to tighten or loosen monetary policy, central banks weigh

the relative risks to price stability and growth. Mention two indicators that the MPC use
to gauge the risk to inflation and two indicators the MPC use to gauge the risk to
growth.

Answer 1

Step-by-step explanation:

To control economic growth and pull economies out of recessions, central banks employ monetary policy instruments.

Despite the fact that central banks can be beneficial, current short-term remedies may have unfavorable long-term effects.

Governments use fiscal policy as a tool to alter tax and expenditure rates in order to have an impact on the economy.

Politics and appeasing voters can influence fiscal policy, which can result in poor judgments that are not supported by facts or economic theory.

Government efforts may be hampered if monetary policy and fiscal policy are poorly coordinated.