Question

Fiscal policy in the U.S. is largely controlled by:

1) the federal reserve board
2) elected political leaders
3) big business
4) regional banks

Answer 1

Fiscal policy in the United States is controlled by (Option 2)elected political leaders, specifically Congress and the President, whereas the Federal Reserve, or the Fed, manages monetary policy.

Step-by-step explanation:

The question addresses fiscal policy in the U.S., which is largely controlled by elected political leaders, specifically Congress and the President. These entities are responsible for making decisions related to government spending and taxes, which constitute the fiscal policy. In contrast, the Federal Reserve, or the Fed, is in charge of monetary policy, which includes regulating bank lending, interest rates, and financial capital markets. Fiscal policy involves the government's use of taxation and spending to influence the economy. It is important to differentiate between fiscal policy and monetary policy, as they are managed by different entities and serve distinct but complementary roles in economic management.

While the Federal Reserve has significant independence and power in executing monetary policy, it does not have the same role in fiscal policy. Fiscal policy can have long debates and processes for enactment, requiring approval from both the legislative branch and the executive branch. The separation of these functions helps to balance economic decision-making and prevent undue political influence on certain areas of economic policy.