Question

Congress passes a bill calling for a 5% tax decrease. The president then signs it
a.) the government's monetary policy
b.) government's open. market regulations
c.) the government's tight money policy
d.) the government's fiscal policy

Answer 1

Answer:

d.) the government's fiscal policy

Explanation:

Fiscal policy is the actions of a government to alter spending and taxation to influence economic direction. This implies that fiscal policy tools are the level of government spending and taxation.

Reducing taxes and government spending increases the money supply in the market.  The government will consider these actions during recessions to stimulate economic growth. Increasing taxes and decreasing spending reduces money circulation in the economy, thereby regulating economic growth.