Question

which of the following activities represent(s) the use of fiscal policy? choose one or more: a. the economy is doing poorly, and government provides subsidies to key industries. b. the economy is expanding and the federal reserve decides to take steps to decrease the money supply. c. the economy is in a recession and a privately funded advertising program encourages consumers to purchase more goods and services. d. the economy is expanding, but because of concerns about pollution, the government passes tougher antipollution regulations. e. the government restricts the purchase of cigarettes. f. the economy is expanding and the government increases the income tax rate to combat inflation.

Answer 1

Activities (a) and (f) in the question represent the use of fiscal policy, with (a) being an example of expansionary fiscal policy to stimulate the economy and (f) as contractionary fiscal policy to reduce inflation.

Step-by-step explanation:

The question concerns fiscal policy, which is the government's use of its budget through taxation and spending to influence economic conditions. The activities that represent the use of fiscal policy include:

(a) The economy is doing poorly, and the government provides subsidies to key industries. This is an example of expansionary fiscal policy where government spending is increased to stimulate the economy.

(f) The economy is expanding and the government increases the income tax rate to combat inflation. This is an example of contractionary fiscal policy where taxes are increased to cool down the economy.

Option (b) involves monetary policy, which is the domain of the Federal Reserve, not fiscal policy. Options (c), (d), and (e) are not examples of fiscal policy. Option (c) involves private sector initiatives, while (d) and (e) involve government regulations and restrictions which do not directly alter government spending or tax policies to influence aggregate demand.