Monetary Policy or Fiscal Policy?

by: billswong

For each scenario, decide whether a fiscal policy tool or a monetary policy tool is being discussed.

  1. 1

    Congress raises taxes to close a budget deficit.

  2. 2

    The discount rate is increased, making it more costly for banks to borrow money from the Fed.

  3. 3

    Reserve requirements are lowered for banks in an effort to make more money available to borrowers.

  4. 4

    The President proposes a cut in the corporate tax rate.

  5. 5

    Congress approves an increase in spending on the Supplemental Nutrition Assistance Program.

  6. 6

    The Fed Chairman suggests the Federal Reserve will be selling bonds in the open market to combat inflation.

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