Asked by Collin Shaffer on Jul 04, 2024
Verified
The term "fiscal policy" refers to
A) the use of tax changes to make the distribution of personal income more equitable.
B) changes in the levels of government spending and taxation for the purpose of stabilizing the economy.
C) changes in the level of government spending.
D) the use of taxes and transfer payments to make the distribution of after-tax income more equitable.
E) the use of government spending and taxes to produce an optimal mix of public goods and to correct for various types of market failure,such as the problems that occur as a result of pollution.
Fiscal Policy
Governmental use of spending and taxation to influence the economy.
Government Spending
Expenditures by the government for its operations, programs, and debt payments, which can influence the economy's overall performance.
Taxation
The process or system through which governments levy charges on citizens and corporate entities to finance government spending and various public expenditures.
- Understand the significance of government spending and taxation changes on economic activity.
Verified Answer
CB
charlotte BonvarletJul 10, 2024
Final Answer :
B
Explanation :
Fiscal policy involves changes in government spending and taxation with the goal of stabilizing the economy. This can include increasing government spending during times of recession to stimulate economic growth, or raising taxes during times of inflation to reduce demand and stabilize prices. None of the other answer choices accurately describe fiscal policy.
Learning Objectives
- Understand the significance of government spending and taxation changes on economic activity.