Which of the following would be considered a fiscal policy action?
A) A city changes its rates of land tax.
B) A federal government subsidy for hybrid cars to encourage the purchase of fuel-efficient cars.
C) Foreign aid given to Indonesia.
D) A tax cut designed to stimulate spending during an economic contraction.

Question

Quizplus · Accepted Answer

A tax cut designed to stimulate spending during an economic contraction is a fiscal policy action as it involves changing government spending or taxation policies to influence the economy. The other choices are either local policies (A), foreign aid (C) or a subsidy (B) which are not directly related to government fiscal policy.

Which of the Following Would Be Considered a Fiscal Policy