Which of the following would be classified as fiscal policy?
A) Provinces increase taxes to fund education.
B) The Bank of Canada lowers interest rates to stimulate the economy.
C) The federal government passes tax cuts to encourage households to install solar panels.
D) The federal government lowers tax rates to stimulate the economy.

Question

Quizplus · Accepted Answer

Fiscal policy refers to actions taken by the government, specifically related to spending and taxation, in order to influence the economy. Thus, the only option that represents a government action related to taxation (the federal government lowering tax rates to stimulate the economy) is an example of fiscal policy. The other options are not related to government spending or taxation, and therefore are not examples of fiscal policy.

Which of the Following Would Be Classified as Fiscal Policy