f) Strengths and weaknesses

i) strengths and weaknesses of demand-side policies

strengths of monetary policy

• central bank is not influenced by political agendas

• long-term outlook and planning

weaknesses of monetary policy

• time lag between policy and effect

• low consumer confidence → no response to interest rate changes

strengths of fiscal policy

• taxation → income equality + less negative externalities

• short-run government expenditure can increase LRAS

weaknesses of fiscal policy

• political changes → fluctuating policies

• government expenditure → budget deficit + public debt → austerity