Multiple Choice
In the context of U.S. macroeconomics, who has primary authority over fiscal policy (government spending and taxation decisions)?
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19. Fiscal Policy
Introduction to Fiscal Policy
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In the United States, who is primarily responsible for setting fiscal policy (taxing and spending decisions)?
A
The Federal Reserve through open market operations
B
Congress and the President (the federal government)
C
The Bureau of Labor Statistics by changing inflation measures
D
The International Monetary Fund by issuing lending conditions
Verified step by step guidance1
Understand the definition of fiscal policy: Fiscal policy involves government decisions on taxation and public spending to influence the economy.
Identify the institutions involved in economic policy: The Federal Reserve handles monetary policy, which includes open market operations, not fiscal policy.
Recognize that the Bureau of Labor Statistics is responsible for collecting and reporting data, such as inflation measures, but does not set fiscal policy.
Know that the International Monetary Fund (IMF) provides financial assistance and policy advice internationally but does not set fiscal policy for the United States.
Conclude that fiscal policy decisions in the United States are primarily made by Congress and the President, representing the federal government.
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