Questions
Academic Courses Test#3
Single choice
In 2003, government passed a substantial cut in income taxes. The central bank also lowered interest rates. How can these two actions be categorized?
Options
A.a. Both actions can be categorized as fiscal policy.
B.b. The tax cut can be categorized as fiscal policy and the lowering of interest rates can be categorized as monetary policy.
C.c. Both actions can be categorized as monetary policy.
D.d. The tax cut can be categorized as monetary policy and the lowering of interest rates can be categorized as fiscal policy.
E.e. The tax cut can be categorized as expansionary and the interest rate change can be categorized as contractionary.
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Step-by-Step Analysis
To approach this question, we first identify the two actions described: a substantial cut in income taxes and a central bank's lowering of interest rates.
Option a: Both actions can be categorized as fiscal policy. This is inaccurate because fiscal policy typically refers to government spending and taxation decisions, whereas monetary policy concerns central bank actions like setting interest rates. Since one action is......Login to view full explanationLog in for full answers
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