Please type all the answers in short, thank you. 1) What is fiscal policy, and w
ID: 1160433 • Letter: P
Question
Please type all the answers in short, thank you.
1) What is fiscal policy, and who is responsible for fiscal policy? 2) What is the difference between federal purchases and federal expenditures? 3) Give an example of an automatic stabilizer. Explain how automatic stabilizers work in the case of recession. 4) How does expansionary monetary policy increase spending in the economy compared to how expansionary fiscal policy increases spending in the economy? 5) Identify each of the following as () part of an expansionary fiscal policy, (ii) part of a contractionary fiscal policy, or (ii) not part of fiscal policy. a. The personal income tax rate is lowered. b. Congress cuts spending on defense. c. College students are allowed to deduct tuition costs from their federal income taxes. d. The corporate income tax rate is lowered. e. The state of Nevada builds a new tollway in an attempt to expand employment and ease traffic in Las Vegas.Explanation / Answer
1) Fiscal policy is the policy of government related to government expenditure or taxation. Fiscal policy is used by the government to control the money supply. When there is excess money in the economy then government can either decrease its spending or increase taxes. On the other hand, in case of less money supply, government can either increase its spending or decrease taxes.