Fiscal Policy

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Fiscal Policy is controlled by...

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The Government

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

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expansionary policy

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Taxing & spending to slow the economy is referred to as

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contractionary policy

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During an economic expansion, the Federal Government should use...

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a contractionary fiscal policy

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During a contraction / recession, the Federal Government should use

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an expansionary fiscal policy

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An example of expansionary fiscal policy would be: cutting taxes., cutting government spending., cutting production of consumer goods., cutting prices of consumer goods.

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cutting taxes.

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If the unemployment rate is rising and GDP is falling, what fiscal policy action should the federal government MOST likely follow? Options: decreasing taxes, decreasing spending, decreasing the money supply, decreasing the reserve requirement.

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decreasing taxes.

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If an economy experiences a dramatic rise in prices, which fiscal policy action could be taken? Options: Selling securities on the open market, Raising interest rates, Reducing government spending, Raising reserve requirements

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Reducing government spending

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The Federal government is concerned that economic growth is too high, that it is unsustainable, and that inflation is resulting. Which fiscal policy might be enacted to reduce inflation? Options: Increasing taxation, Open market sales, decreasing taxation, Increasing government spending

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Increasing taxation

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When the government raises taxes, what does it take out of circulation?

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Money