ECONOMICS
FISCAL POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Decrease the discount rate
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Increase government Spending
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Increase tax rates
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Increase the reserve requirement
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Detailed explanation-1: -Expansionary fiscal policy: This policy is designed to boost the economy. It is mostly used in times of high unemployment and recession. It leads to the government lowering taxes and spending more, or one of the two.
Detailed explanation-2: -There are three types of fiscal policy. They are neutral policy, expansionary policy, and contractionary policy.
Detailed explanation-3: -The two major examples of expansionary fiscal policy are tax cuts and increased government spending. Both of these policies are intended to increase aggregate demand while contributing to deficits or drawing down budget surpluses.
Detailed explanation-4: -The government possesses two major fiscal tools for influencing the economy. These tools can be divided into spending tools and revenue tools. Spending tools refer to the overall government spending. On the other hand, revenue tools refer to taxes collected by the government.
Detailed explanation-5: -Which of the following is a reason a government might increase government spending? It is concerned that the unemployment rate is too high.