What tools are used in fiscal policy?
A) increases in the money supply
B) nationalization of key industries
C) only government purchases
D) government purchases, transfer payments, and taxes

Question

What tools are used in fiscal policy?  
A) increases in the money supply 
B) nationalization of key industries 
C) only government purchases 
D) government purchases, transfer payments, and taxes

Quizplus · Accepted Answer

Fiscal policy refers to the government's use of spending and taxation to influence the economy. The tools used in fiscal policy are government purchases, transfer payments, and taxes. Option A, increases in the money supply, are tools used in monetary policy, not fiscal policy. Option B, nationalization of key industries, is a policy decision rather than a tool of fiscal policy. Option C, only government purchases, is too narrow and does not encompass all of the tools typically used in fiscal policy.

What Tools Are Used in Fiscal Policy