Fiscal policy includes government changes in
A) interest rates.
B) the supply of money.
C) transfer payments.
D) exports.
E) imports.

Question

Quizplus · Accepted Answer

Fiscal policy refers to the use of government spending, taxation, and transfer payments to influence macroeconomic conditions. Transfer payments are payments made by the government to individuals or groups, such as Social Security and welfare. Therefore, C (transfer payments) is the correct choice. Interest rates (A) and the supply of money (B) are part of monetary policy, which is the control of money supply and interest rates by a central bank. Exports (D) and imports (E) are related to international trade, which is not within the direct control of a government's fiscal policy.

Fiscal Policy Includes Government Changes in