- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 3. Fiscal Policy
- Subject 3. Fiscal Policy Tools
CFA Practice Question
Changes in fiscal policy refer to changes in ______.
II. tax policy
III. money supply
IV. Fed interest rates
V. borrowing money by issuing T-securities
I. government expenditures
II. tax policy
III. money supply
IV. Fed interest rates
V. borrowing money by issuing T-securities
A. I and II
B. I, II and V
C. III, IV and V
Explanation: Changes in fiscal policy refer to deliberate changes in government expenditures, tax policy, and government borrowing to affect the size of the budget deficit or surplus.
User Contributed Comments 7
User | Comment |
---|---|
Cata | neither borrowing or expenditure relate to fiscal policy, cause aren't DIRECT changes of taxes, excisses, tax credits, etc. which really do comprise fiscal policy |
johnsk | Cata: what you refer to is tax policy. Borrowing and spending are also part of fiscal policy! |
danlan | Fiscal policy meaning is wider than tax policy, it includes tax, gov spending, etc. |
bhaynes | The only options above that apply to the Fed are control of the money supply and interest rates. The Gov't controls the rest. Answer V is tricky.....but it can be ruled out as a Fed activity since the Fed does not issue treasuries, the Treasury does. So this would fall under Gov't (fiscal) activities, not Fed activities. ******Remember the Fed only buys and sells treasury securities, it does not issue them. |
poomie83 | money supply and interest rates are monetary policy tools |
akils | @bhyanes - thanks |
renataa | Treasury securities were the tricky one... |