Fiscal policy involves increases or decreases in:
A)exports and imports.
B)interest rates.
C)the money supply.
D)government spending and taxes.

Question

Quizplus · Accepted Answer

Fiscal policy involves government actions to either increase or decrease government spending and taxes in order to influence the economy. This can be done by either increasing government spending or decreasing taxes, which would stimulate the economy by increasing aggregate demand. Conversely, decreasing government spending or increasing taxes can decrease aggregate demand and slow down the economy. Fiscal policy has a direct impact on the government’s budget, which is why it is often used as a tool for managing the economy.

Fiscal Policy Involves Increases or Decreases In