What is the role of monetary policy in alleviating economic downturns? Q.What is the role of monetary policy in alleviating economic downturns? A.Economists view monetary policy as the first line of defense against economic slowdowns—the Federal Reserve can act faster than the president or Congress, and it is better equipped to judge the appropriate timing and magnitude of economic stimulus. Read more about What is the role of monetary policy in alleviating economic downturns?
What are automatic stabilizers and how do they work? Q.What are automatic stabilizers and how do they work? A.Automatic stabilizers are features of the tax and transfer systems that temper the economy when it overheats and stimulate the economy when it slumps, without direct intervention by policymakers. Read more about What are automatic stabilizers and how do they work?
What characteristics make fiscal stimulus most effective? Q.What characteristics make fiscal stimulus most effective? A.Fiscal stimulus can raise output and incomes in the short run. To have the greatest impact with the least long-run cost, the stimulus should be timely, temporary, and targeted. Read more about What characteristics make fiscal stimulus most effective?
