Question

The decision to raise taxes is an example of

a) Fiscal policy
b) Monetary policy
c) Trade policy
d) Foreign policy

Answer 1

Fiscal policy, which is the use of government spending and tax policy to influence the economy, is an example of fiscal policy. So, the correct answer is option a.

Step-by-step explanation:

Fiscal policy, defined as the use of government spending and tax policy to influence the path of the economy over time, is an example of Fiscal policy. It is one of two policy tools for fine-tuning the economy, the other being monetary policy. While monetary policy is made by policymakers at the Federal Reserve, fiscal policy is made by Congress and the President. So, the correct answer is option a.