Fiscal policy:
A) is the decrease in private spending that occurs when government increases spending.
B) occurs when people see that lower taxes today means higher taxes in the future,so instead of spending their tax cut they save it to pay future taxes.
C) is federal government policy on taxes,spending,and borrowing that is designed to influence business fluctuations.
D) is central bank policy on the monetary base,interest rates,and bank reserves that is designed to influence business fluctuations.

Question

Quizplus · Accepted Answer

Fiscal policy refers to the government's use of taxes, spending, and borrowing to influence the economy. Option A is incorrect as fiscal policy usually involves an increase in government spending, which can lead to an increase in private spending. Option B is incorrect as it does not accurately describe the relationship between taxes and spending. Option D is also incorrect as it refers to monetary policy, which is separate from fiscal policy.

Fiscal Policy