Question

This diagram shows a government’s approach to taxing and spending. Which of the following would be a good title for this diagram?


Government Spending
The National Economy
The Federal Debt
Fiscal Policy

Answer 1

The correct answer is Fiscal Policy.

Fiscal Policy refers to the government's spending and taxing. It is the means by which the government adjusts its spending levels and tax rates to monitor and influence the nation's economy. It influences the economy using the money supply and interest rates. The objective  of fiscal policy is to create healthy economic growth.

Government Spending means spending only, without taxing. The National Economy is a broad term describing the whole economy of a nation. The Federal Debt is the sum of all the debts owned by the federal government.

Answer 2

The correct option is Fiscal Policy.  

Further Explanation:

Fiscal Policy is referred to the means by which an administration or government adjusts the ‘spending levels’ and ‘tax rates’ to influence and monitor a nation’s economy. It refers to as sister strategy to ‘monetary policy’ through which the central bank monitors and influences the country’s money supply.  

These two policies can be used in a variety of combinations to direct a nation’s economic goals. The government can control “economic phenomena” by using a combination of ‘monetary’ and ‘fiscal’ policy.  

When the administration decides on the “goods and services” it purchases, the ‘transfer payment’ it distributes, or the collection of taxes and it is ‘engaging’ in fiscal policy.

The main ‘economic impact’ of any modification in the “government budget” is felt by specific groups- tax cut for children and families.

Learn More:

1. Though the outcomes of the Schenck and New York Times differed, what did these decisions have in common? The government has a heavy burden to prove harm. The government can limit speech that causes harm. The government has unlimited power to limit speech. The government must follow the first amendment.

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2. Why did President Reagan call for soviet leader Gorbachev to “tear down” the Berlin wall?

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Answer Details:

Grade: High School

Chapter: Fiscal Policy

Subject: Social Studies

 

Keywords:

Fiscal Policy, administration or government, economy, money supply, monetary policy, goods and services, government budget, tax