Which of the following is an example of fiscal policy?
A)a reduction in the federal funds rate.
B)a reduction in the money supply.
C)a reduction in lump-sum taxes.
D)an increase in the physical stock of capital.

Question

Quizplus · Accepted Answer

Fiscal policy refers to the government's use of taxes and spending to influence the economy. A reduction in lump-sum taxes is an example of fiscal policy because it directly affects the government's revenue and can influence consumption and investment in the economy. A reduction in the federal funds rate and a reduction in the money supply are examples of monetary policy, which is the use of interest rates and other monetary tools to influence the economy. An increase in the physical stock of capital is an example of investment, but it is not directly related to fiscal or monetary policy.

Which of the Following Is an Example of Fiscal Policy