Fiscal policy refers to changes in _____ to affect overall spending in the economy:
A) interest rates
B) government spending and taxation
C) the quantity of money
D) interest rates and of government spending

Question

Quizplus · Accepted Answer

Fiscal policy refers to changes in government spending and taxation to affect overall spending in the economy. The government can increase spending and/or decrease taxes to stimulate economic activity during a downturn, or decrease spending and/or increase taxes during an expansionary period to cool off the economy and prevent inflation. Changes in interest rates and the quantity of money fall under the realm of monetary policy.

Fiscal Policy Refers to Changes in _____ to Affect Overall