The Difference Between Fiscal Policy and Monetary Policy Is That

question 94

Multiple Choice

The difference between fiscal policy and monetary policy is that:

• A)fiscal policy is a macroeconomic policy but monetary policy is a microeconomic policy.
• B)monetary policy is a macroeconomic policy but fiscal policy is a microeconomic policy.
• C)fiscal policy involves regulation of natural monopolies but monetary policy involves the provision of public goods.
• D)monetary policy involves regulation of the money supply but fiscal policy involves government spending and taxing.
• E)fiscal policy involves the promotion of competition but monetary policy involves collecting money to pay for taxes.

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Definitions:

Progressive Tax

A tax system in which the tax rate increases as the taxable amount increases, placing a higher burden on wealthier individuals.

Tax Incidence

The ultimate distribution of a tax burden.

Distribution

The process of making a product or service available for use or consumption by a consumer or business user.

Tax Shifting

Occurs when households can alter their behavior and do something to avoid paying a tax.