Which of the Following Would Be Considered an Example of Fiscal

question 62

Multiple Choice

Which of the following would be considered an example of fiscal policy?

• A)A broad government initiative to reduce the country's reliance on agriculture and promote high-technology industries.
• B)A reduction in income tax rates.
• C)Provision of additional cash to the banking system.
• D)Interest rate hikes generated by a reduction in the money supply.

---

Definitions:

Firms

Business entities that produce goods or provide services to consumers, aiming to maximize profits.

Pigouvian Taxes

Taxes imposed on any market activity that generates negative externalities (costs not reflected in the market price) to correct the market outcome.

External Costs

Costs that are not borne by the producers or users of a product or service, but by society or the environment.

Polluting Firms

Companies that release harmful substances into the environment as a byproduct of their production processes.