Fiscal policy refers to the actions of the President and Congress to tax and spend. Which actors implement it?

Fiscal policy refers to the actions of the President and Congress to tax and spend. Which actors implement it?

• A. Monetary Policy
• B. Regulatory Policy
• C. Fiscal Policy
• D. Trade Policy

Answer: (C)

Fiscal policy uses government spending and taxation to influence the economy, and in the United States it is put into effect by the President and Congress through the budget process and tax laws. The President proposes a budget and policy priorities, but Congress controls the purse strings by passing tax legislation and appropriations that determine how much the government spends and raises in revenue. This combination of proposed policy and enacted legislation is what implements fiscal policy and drives changes in aggregate demand, public investment, and economic activity. Monetary policy, by contrast, manages money supply and interest rates and is carried out by the Federal Reserve. Regulatory policy is shaped by federal agencies that issue rules and enforce compliance. Trade policy involves actions like tariffs and trade agreements that affect international commerce, and while it can involve both the executive branch and Congress, it is a separate realm from the budgetary decisions that define fiscal policy.

Fiscal policy uses government spending and taxation to influence the economy, and in the United States it is put into effect by the President and Congress through the budget process and tax laws. The President proposes a budget and policy priorities, but Congress controls the purse strings by passing tax legislation and appropriations that determine how much the government spends and raises in revenue. This combination of proposed policy and enacted legislation is what implements fiscal policy and drives changes in aggregate demand, public investment, and economic activity.

Monetary policy, by contrast, manages money supply and interest rates and is carried out by the Federal Reserve. Regulatory policy is shaped by federal agencies that issue rules and enforce compliance. Trade policy involves actions like tariffs and trade agreements that affect international commerce, and while it can involve both the executive branch and Congress, it is a separate realm from the budgetary decisions that define fiscal policy.