For Each of the Following Policies, Indicate Whether the Policy

question 29

Essay

For each of the following policies, indicate whether the policy is (1) a monetary or a fiscal policy, (2) an active or a passive policy, and (3) a policy by rules or with discretion:
a.The central bank follows a policy of allowing the money supply to grow at a constant 4 percent per year.
b.A government follows a policy of keeping government spending over a calendar year equal to government revenue over the calendar year.
c.The central bank uses judgment to adjust the growth of the money supply based on expectations of what will happen to output and inflation over the next five years.
d.The government keeps tax laws unchanging and allows government spending to change, depending on which spending bills are passed by the legislature.
e.The central bank follows a policy of adjusting the money supply according to a formula based on deviations of unemployment from the natural rate of unemployment.

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Definitions:

Tax Liability

The total amount of taxes an individual or organization is legally obligated to pay to a taxation authority.

Taxable Income

The amount of income used to determine how much tax an individual or a company owes to the government.

Taxable Income

The portion of an individual's or corporation's income that is subject to taxes according to federal, state, or local laws.

Tax Liability

The total amount of tax that an individual or business owes to the government.