Final answer:
The Japanese government's offer of cash incentives per child is a form of fiscal policy designed to stimulate economic growth. Its impact may lead to short-term growth and inflation, but its effectiveness would depend on broader economic factors, considering Japan's struggle with deflation and slow growth despite aggressive fiscal and monetary policies. Option c is correct.
Step-by-step explanation:
The Japanese government's policy of offering families cash incentives of ¥1 million per child can be classified as a form of fiscal policy. This policy is aimed at stimulating economic growth, increasing the birth rate, and potentially impacting the country's long-term demographic trends.
When a government employs fiscal policies, such as cash incentives for children, this can increase aggregate demand as families have more disposable income to spend. This in turn can lead to short-term economic growth and possibly higher inflation. However, the broader impact of such a policy in Japan's economic context would need to be evaluated against the country's past experiences with deflation and its strategies for monetary policy.
Japan's history shows that despite aggressive fiscal and monetary policy measures, such as quantitative easing and maintaining a zero interest rate policy, Japan has struggled with deflation and slow growth. Based on this historical context, the cash incentive policy may have an inflationary effect in the short run, as it increases consumer spending, but its long-term impact on growth and inflation may be less pronounced if other economic challenges persist. Therefore, while the policy represents a fiscal measure, its ultimate success will likely be contingent upon broader economic conditions and policy frameworks.