All the following actions represent fiscal policy EXCEPT
A)a reduction in the money supply by the Federal Reserve.
B)an increase in government spending.
C)a reduction in individual income tax rates.
D)an increase in corporate income tax rates.

Question

Quizplus · Accepted Answer

A reduction in the money supply by the Federal Reserve represents monetary policy, not fiscal policy. Fiscal policy involves changes in government spending, taxation, and borrowing to influence macroeconomic variables such as employment, inflation, and economic growth. Choices B, C, and D all represent actions that fall under the umbrella of fiscal policy.

All the Following Actions Represent Fiscal Policy EXCEPT