When the government uses taxes and spending to affect national economy, it is engaging in:
A)fiscal policy.
B)monetary policy.
C)interest rate policy.
D)trade policy.
E)exchange rate policy.

Question

Quizplus · Accepted Answer

Fiscal policy involves the use of government taxation and spending to influence the economy. Option B, monetary policy, involves the use of the central bank to control the money supply and interest rates. Options C, D, and E, interest rate policy, trade policy, and exchange rate policy, respectively, are all specific policies within either fiscal or monetary policy.

When the Government Uses Taxes and Spending to Affect National