Credit Suisse Interview Question

What will be more effective, Fiscal or Monetary Policy, in affecting unemployment and raising GDP?

Sales and Trading Analyst: Round 2

1 answers

1
votes

Monetary policy usually works much quicker than fiscal policy, which is known to have about a 2 year lag. The Quantitative easing program that the fed introduced is its form of monetary policy...one of its goals is to keep interest rates low, and with the correct policies, this could lead to more people being able to refinance loans and thus putting money back into the hands of americans. Money in the hands of americans will increase consumer spending and confidence , which is the main sustainable driver of GDP growth. As the economy improves steadily, this will lead to job growth...so monetary policy is a better driver

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