Politics

Question

Why might the government and Central Bank use policy to manage the economy?

A. To cause hyperinflation in the economy.

B. To avoid a depression in the economy.

C. To ensure all businesses are following regulations.

D. To figure out how many people are unemployed.

Answer

B. To avoid a depression in the economy.

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The government and central bank use policy to manage the economy to avoid a depression. Economic policies are implemented to stabilize the economy and promote economic growth. The government and central bank use monetary and fiscal policies to manage the economy. Monetary policy involves managing the money supply and interest rates, while fiscal policy involves government spending and taxation. These policies are used to influence economic activity, such as inflation, employment, and economic growth. By managing the economy, the government and central bank can help prevent economic downturns and promote stability and growth.