Place a check next to all of the statements that are examples of fiscal policy. There is an increase in federal income tax rates. The Federal Reserve purchases bonds in the open market. The federal estate tax is repealed. The federal government increases military spending. The federal government builds a high-speed train that connects Los Angeles and Las Vegas. The Federal Reserve increases the money supply by decreasing the required reserve ratio. To help domestic firms, the federal government sets a quota on the number of goods that can be imported.
Fiscal policy can be defined as the use of government spending and taxation to affect the economic variables such as inflation, unemployment, aggregate demand, etc.
The following measures are example of fiscal policy:
An increase in federal income tax rates.
The federal estate tax is repealed.
An increase in military spending
The federal government builds a high-speed train that connects Los Angeles and Las Vegas.
