A key tool of countercyclical fiscal policy is
A) the interest rate
B) the federal funds rate
C) the tax code
D) the regulatory code
E) Presidential executive orders.

Question

Quizplus · Accepted Answer

Countercyclical fiscal policy involves using changes in government spending and/or taxation to stabilize the economy during fluctuating business cycles. The tool that is most commonly associated with countercyclical fiscal policy is the tax code, as changes in taxation can directly affect aggregate demand and help to counteract economic downturns or overheating. Other tools, such as interest rates and regulation, are more often associated with countercyclical monetary policy. Executive orders may also be used to influence policy, but are not directly tied to countering economic cycles.

A Key Tool of Countercyclical Fiscal Policy Is