Fiscal Policies

Fiscal Policy is controlled by...

• The Government

• The Federal Reserve System

• The states

• The Department of Commerce

The two "tools" of Fiscal Policy are:

• the power to tax

• the power to spend

• the power to borrow money

• the power to print money

Taxing & spending to help the economy grow is referred to as

• expansionary policy

• monetary policy

• contractionary policy

• budget deficit

An example of expansionary fiscal policy would be

• cutting taxes.

• cutting government spending.

• cutting production of consumer goods.

• cutting prices of consumer goods.

If the unemployment rate is rising and GDP is falling, the fiscal policy action that the federal government should MOST likely follow is 

• decreasing taxes.

• decreasing spending.

• decreasing the money supply.

• decreasing the reserve requirement.

The Federal government is concerned that economic growth is too high, that it is unsustainable, and that inflation is resulting. Which of the following fiscal policies  might be enacted to reduce inflation?

• Increasing taxation

• Open market sales

• decreasing taxation

• Increasing government spending

An example of a contractionary fiscal policy would be if:

• taxes were cut

• the government bailed out GM 

• the Fed decrease the fed funds rate

• taxes were increased