ECONOMICS
FISCAL POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The Federal reserve lowers the discount rate
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The government raises taxes on all citizens by 5%
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The government increases spending by building more infrastructure
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The federal reserve increases the reserve requirement
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Detailed explanation-1: -The two significant examples include increased government spending as well as tax cuts. These policies seek to raise aggregate demand while leading to deficits or drawing the decline of budget surpluses.
Detailed explanation-2: -The two major examples of expansionary fiscal policy are tax cuts and increased government spending.
Detailed explanation-3: -Fiscal policy that increases aggregate demand directly through an increase in government spending is typically called expansionary or “loose.” By contrast, fiscal policy is often considered contractionary or “tight” if it reduces demand via lower spending.
Detailed explanation-4: -Decreasing the discount rate. Purchasing government securities. Reducing the reserve requirement.
Detailed explanation-5: -Lower the short-term interest rates. Reduce the reserve requirements. Expand open market operations (buy securities) Stimulation of economic growth. Increased inflation. Currency devaluation. Decreased unemployment. 06-Dec-2022