Identify each of the following as expansionary fiscal policy, contractionary fis
ID: 1195846 • Letter: I
Question
Identify each of the following as expansionary fiscal policy, contractionary fiscal policy, not fiscal policy a. taxes are increased to reign in the economy b. the Federal Reserve increases the interest rate paid on reserves in attempt to reign in the economy c. income tax rates on the top 1 percent of income earners are increased in response to protests d. all education expenses are now allowed to be deducted from taxes e. corporate tax rates are decreased in order to stimulate the economy f. spending on building and reinforcing roads and bridges is increased in order to stimulate the economy
Explanation / Answer
a. taxes are increased to reign in the economy : Contractionary fiscal policy
b. the Federal Reserve increases the interest rate paid on reserves in attempt to reign in the economy : Not fiscal policy, but monetary policy
c. income tax rates on the top 1 percent of income earners are increased in response to protests : Contractionary fiscal policy
d. all education expenses are now allowed to be deducted from taxes : Expansionary fiscal policy
e. corporate tax rates are decreased in order to stimulate the economy : Expansionary fiscal policy
f. spending on building and reinforcing roads and bridges is increased in order to stimulate the economy : Expansionary fiscal policy