Question

28-In​ 2008, in order to encourage people to spend more money and stimulate the​ economy, Congress passed the American Reinvestment and Recovery​ Act, authorizing the government to spend​ $831 billion on​ education, infrastructure​ (such as roads and​ bridges), healthcare, and a host of other initiatives and​ projects, hoping to put people back to work. This is an example of the government exercising​ _______ policies.

A.
monetary
B.
deflationary
C.
international trade
D.
fiscal
E.
budgetary

Answer 1

Answer: D Fiscal Policies

Fiscal policies refer the adjustments made by the government to tax policies and government spending in order influence the level of economic activity in a country.

The main aim of a fiscal policy is to stabilize the economy while trying to avoid the impact of excessive growth and recessions.

In the question, the government passed a bill that authorized spending on infrastructure, healthcare etc. This was done in order to increase employment and ultimately increase aggregate demand. Hence this is a fiscal policy.