Question

Why is spending by the U.S. government on scientific research at NASA fiscal policy while spending by the University of Illinois is not fiscal policy? Why is a cut in the payroll tax fiscal policy whereas a cut in a state income tax is not fiscal policy?

Short answer

NASA spending and payroll tax cuts are both dealt with on a national level, therefore any changes relating to them are deemed fiscal policy. But the other hand, neither the University of Illinois nor the federal taxes are dealt with on a nationwide basis.

Step-by-step solution

Concept of fiscal policy.

Adherence to the central current deficit, taxation, and credit policies. The national, county, and city councils all employ government spending to provide a range of services.

Explanation of solution.

To have a broad impact across the economy, fiscal policy is executed at the national level. Public sector budget has a minor impact and is therefore not deemed tax policy. Because NASA is a federal agency, expenditure on it is a budgetary policy, whereas expenditure on the University of Illinois, which would be a state-run institution, is not. the level is not. On a national basis, a tax rate is enforced. As a result, lowering it is fiscal policy. A state income tax, on the other hand, is different in each state. As a result, lowering the state tax is not really a fiscal policy.