Fiscal policy affects economic growth by

Question

Quizplus · Accepted Answer

Fiscal policy, which involves government spending and taxation, can affect incentives for private investment, work, hiring, and innovation. For example, if the government increases spending or cuts taxes, it may stimulate consumer spending and business investment, leading to economic growth. However, if the government raises taxes or cuts spending, it may reduce disposable income and confidence, leading to a decrease in private spending and economic growth. Incentives also play a crucial role in the decision-making of businesses and individuals, and they are critical for attracting new investments, creating jobs, and fostering innovation.

Fiscal Policy Affects Economic Growth by