Question

Which of the following is an example of the use of fiscal policy by the U.S. government? A. Congress makes it illegal for the police union to go on strike. B. The Federal Reserve Bank lowers the interest rate on loans to corporations. C. The Department of Transportation increases spending on highway repairs. D. The Supreme Court rules that unions have the right to collective bargaining.

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Answer 1

Option C, which involves the Department of Transportation increasing spending on highway repairs, is an example of fiscal policy action by the U.S. government, as it pertains to changes in government spending to influence the economy.

Step-by-step explanation:

An example of the use of fiscal policy by the U.S. government is when the government changes tax or spending levels through legislation. Among the options given:

• Option C: The Department of Transportation increasing spending on highway repairs is an example of fiscal policy, as it involves government spending, which is a key component of fiscal policy actions.

Fiscal policy involves the use of government spending and taxation to influence the economy. During economic downturns or recessions, federal fiscal policies may include discretionary fiscal policy, such as new laws to change tax or spending like the 2009 stimulus package or automatic stabilizers like unemployment insurance and food stamps. These actions are intended to stimulate aggregate demand in the economy to encourage economic growth or manage inflation.