How does the government use fiscal policy to influence the economy?Multiple choice question.By changing interest ratesBy printing or destroying moneyBy creating new businessesBy controlling taxation and its own spending
Question
How does the government use fiscal policy to influence the economy?Multiple choice question.By changing interest ratesBy printing or destroying moneyBy creating new businessesBy controlling taxation and its own spending
Solution
The government uses fiscal policy to influence the economy by controlling taxation and its own spending. This is because fiscal policy involves the use of government revenue collection (taxation) and expenditure (spending) to influence the economy. The government can adjust its spending levels and tax rates to monitor and influence a nation's economy. It is used along with the monetary policy which the central bank uses to control the money supply.
Similar Questions
Which economic activity is part of a government's fiscal policy?A.Raising tax ratesB.Printing more moneyC.Calculating inflationD.Regulating corporations
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Fiscal policy helps the government manage the economy by:A.setting the level of unemployment for the year.B.spending tax money during difficult economic times.C.setting environmental regulations for businesses.D.deciding on the proper money supply in the country.
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Fiscal policy is a mechanism the government employs to influence the economy. Fiscal policy is based onMultiple Choicethe government's taxing and spending decisions.the money supply.the importance of maintaining a 12-month (fiscal year) economic cycle.the projections of the Federal Reserve Board.the idea that a balanced budget is the key to a healthy economy.
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