Question

Determine if the statements below describe monetary policy or fiscal policy; place each statement in the appropriate bin. All statements should be placed.

Monetary Policy Fiscal Policy
_____ ________

The Federal Reserve, the central bank of the United States, decreased the U.S. money supply because of an increasing aggregate price level.

Provincial government spending in Nova Scotia increased to create new jobs in the fishing industry.

Canada's federal government increased taxes to fight inflation.

To limit the impact of a recession, the Bank of Canada increased Canada's money supply.

Answer 1

The given statements are examples of monetary and fiscal policy, with the Federal Reserve's actions and the Bank of Canada's actions being monetary policy, and the other two statements relating to government spending and taxation being fiscal policy.

Step-by-step explanation:

The statements provided are associated with either monetary policy or fiscal policy. These are two different types of macroeconomic policies used by governments and central banks to influence the economy.

• The Federal Reserve, the central bank of the United States, decreased the U.S. money supply because of an increasing aggregate price level. - Monetary Policy
• Provincial government spending in Nova Scotia increased to create new jobs in the fishing industry. - Fiscal Policy
• Canada's federal government increased taxes to fight inflation. - Fiscal Policy
• To limit the impact of a recession, the Bank of Canada increased Canada's money supply. - Monetary Policy

Monetary policy involves the control of the money supply and interest rates by the central bank to manage inflation, encourage economic growth, and adjust currency value. Fiscal policy involves government decisions on taxation and spending to influence economic conditions.