Question

1.​Describe the difference between expansionary and contractionary Fiscal Policy.

2.​Describe 3 of the functions of the Federal Reserve System?

Answer 1

Answer 1

Fiscal policy is the use of government spending and tax policy to influence the path of the economy over time.

Expansionary fiscal policy occurs when the government acts to cut tax rates or increase government spending, shifting the aggregate demand curve to the right. Contractionary fiscal policy occurs when the government raises tax rates or cuts government spending, shifting aggregate demand to the left.

Answer 2

3 of the functions of the Federal Reserve System are:

1. Conducting Monetary Policy

The Federal Open Market Committee sets U.S. monetary policy in accordance with its mandate from Congress: to promote maximum employment, stable prices, and moderate long-term interest rates in the U.S. economy.

2. Supervising and Regulating Financial Institutions and Activities

The Federal Reserve promotes the safety and soundness of individual financial institutions and monitors their impact on the financial system as a whole.

3. Fostering Payment and Settlement System Safety and Efficiency

The Federal Reserve works to promote a safe, efficient, and accessible system for U.S. dollar transactions.