Government Spending on Education as Fiscal Policy

Steps:

• Identify fiscal policy as government actions on spending and taxes to influence demand.
• Recognize education spending as direct government expenditure, fitting fiscal tools.
• Rule out monetary policy, which involves central bank control of money supply and interest rates.
• Exclude supply-side policy, typically focused on tax incentives or deregulation for productivity, not direct spending.

Why C is correct:

• Fiscal policy includes government spending to stabilize the economy, directly encompassing education outlays as per Keynesian frameworks.

Why the others are wrong:

• A: Misclassifies as supply-side; education spending is demand-focused fiscal, not supply incentives.
• B: Erroneously tags as monetary; no involvement of money supply or rates.
• D: Wrongly includes monetary; education spending isn't a central bank tool.

Final answer: C