Which policy directly influences government spending on public projects?

Which policy directly influences government spending on public projects?

• A. Monetary policy
• B. Regulatory policy
• C. Fiscal policy
• D. Trade policy

Answer: (C)

Fiscal policy is the correct choice because it refers to the government's use of spending and taxation to influence the economy. When the government decides to increase or decrease its spending on public projects, it is directly implementing fiscal policy measures. This can include infrastructure projects, education funding, or healthcare initiatives, all of which are funded through government budgets. In contrast, monetary policy primarily involves the management of the money supply and interest rates by a country's central bank, which affects overall economic activity but does not directly dictate government spending levels on public projects. Regulatory policy involves creating rules and standards that govern how businesses operate but does not influence spending directly. Trade policy deals with the regulations and tariffs that a government imposes on traded goods, impacting international commerce rather than domestic public spending initiatives. Therefore, fiscal policy is the only option that specifically addresses and influences government expenditure on public projects.

Fiscal policy is the correct choice because it refers to the government's use of spending and taxation to influence the economy. When the government decides to increase or decrease its spending on public projects, it is directly implementing fiscal policy measures. This can include infrastructure projects, education funding, or healthcare initiatives, all of which are funded through government budgets.

In contrast, monetary policy primarily involves the management of the money supply and interest rates by a country's central bank, which affects overall economic activity but does not directly dictate government spending levels on public projects. Regulatory policy involves creating rules and standards that govern how businesses operate but does not influence spending directly. Trade policy deals with the regulations and tariffs that a government imposes on traded goods, impacting international commerce rather than domestic public spending initiatives. Therefore, fiscal policy is the only option that specifically addresses and influences government expenditure on public projects.