Question

1. select the following government actions that would be considered part of fiscal policy.

• the federal reserve lowers interest rates to stimulate the economy.
• the government borrows money from the federal reserve system to increase the money supply.
• wages rise due to a good economy.
• the government lowers taxes in order to stimulate the economy

Explanation:

Fiscal policy involves government use of taxation and spending to influence the economy. Lowering taxes is a core fiscal policy tool to boost economic activity. The other options relate to monetary policy (actions by the Federal Reserve on interest rates/money supply) or an economic outcome, not fiscal policy.

Answer:

D. The government lowers taxes in order to stimulate the economy