Question

In 2003, Congress passed a substantial cut in income taxes. The Federal Reserve also substantially lowered interest rates. How can these two actions be categorized?A. Both actions can be categorized as monetary policy.B. Both actions can be categorized as fiscal policy.C. The tax cut can be categorized as monetary policy and the lowering of interest rates can be categorized as fiscal policy.D. The tax cut can be categorized as fiscal policy and the lowering of interest rates can be categorized as monetary policy.

Answer 1

Answer:

D. The tax cut can be categorized as fiscal policy and the lowering of interest rates can be categorized as monetary policy.

Explanation:

Fiscal policy is when the government uses either taxes or government spending to influence the economy.

Contractionary fiscal policy is when the government increases taxes or reduces spending.

Expansionary fiscal policy is when the government decreases taxes or increases spending.

Monetary policy are policies enacted by central bank of a country to control money supply or interest rest.

Contractionary monetary policy is reducing money supply or increasing interest rates.

Expansionary monetary policy is increasing money supply or decreasing interest rate.

I hope my answer helps you.