Fiscal policy refers to the
A)business sector's influence on investment and GDP.
B)households' attempts to change saving to encourage growth.
C)government's use of trade- related policy tools to influence the net export function, thereby influencing GDP.
D)government's use of spending and taxing policies to influence equilibrium real GDP.
E)government's attempts to maintain a vertical AS curve so as to stabilize output.

Question

Quizplus · Accepted Answer

Fiscal policy refers to the government's use of spending and taxing policies to influence equilibrium real GDP. It is a tool used to stabilize the economy during times of recession or inflation. The government can increase spending and/or lower taxes to stimulate economic growth or decrease spending and/or increase taxes to control inflation.

Fiscal Policy Refers to the