Question

Identify each government policy as an example of Expansionary Fiscal Policy or Contractionary Fiscal Policy, [Choose] The Coronavirus Aid, Relief, and Economic Security (CARES) Act, 2020 < American Recovery and Reinvestment Act, 2009 [Choose] < [Choose] Elimination of the State and Local Tax (SALT) deduction from annual income taxes $100 increase in vehicle registration fees [Choose ] Troubled Asset Relief Program (TARP), 2008 [Choose]

Answer 1

Fiscal Policy :
1. CARES act, 2020 - Expansionary [Government spending increased]
2. American recovert and reinvestment act, 2009 - Expansionary [Government spending increased]
3. Elimination of the state and local tax (SALT) deduction from annual income taxes - Expansionary [Tax rate cut]
4. $100 increase in vehicle registration fees - Contractionary [Increase in taxes]
5. Troubled Asset Relief Program(TARP), 2008 - Expansionary [Increased government spending]

Monetary Policy :
1. The Fed is selling T-bills - Contractionary [Reduces money supply in the market]
2. The Federal Funds rate has been adjusted from 2.5% down to 0.25% -  Expansionary [Lowering short term interest rates]
3. The Fed purchased $80 billion of mortage backed securities from banks - Expansionary [Increases money supply in the market]
4. The reserve ratio is increased from 10% to 15% - Contractionary [Reduces money supply in the market]
5. The discount rate increases from 1% to 1.75 % - Contractionary [Contracts the money supply]