Final answer:
The use of fiscal policy by the U.S. government is exemplified by implementing tax cuts. Fiscal policy entails government actions that adjust spending and taxation to influence economic conditions. Expansionary fiscal policy, such as tax cuts, is often used to stimulate the economy during a recession.
Step-by-step explanation:
Which of the following is an example of the use of fiscal policy by the U.S. government? The correct answer is implementing tax cuts. Fiscal policy involves the government making changes to its spending and taxation levels in order to influence the economy. When the government implements tax cuts, it is trying to increase disposable income for individuals and businesses, thereby encouraging spending and investment to stimulate economic growth. In contrast, monetary policy, which includes altering interest rates and controlling the money supply, is the responsibility of the Federal Reserve, not a fiscal policy tool. Regulating international trade and establishing diplomatic relations are part of foreign policy, not fiscal policy.
In an economic context such as a recession, an expansionary fiscal policy would be deemed most appropriate. This involves increasing government spending, cutting taxes, or both to boost economic activity. On the other hand, during times of economic boom, a contractionary fiscal policy, which includes decreasing government spending or increasing taxes, may be used to cool down an overheating economy.