Fiscal policy focuses on manipulating _____.
A)aggregate demand to smooth out business fluctuations
B)aggregate supply to smooth out business fluctuations
C)both aggregate supply and aggregate demand to smooth out business fluctuations
D)aggregate demand to stimulate the economy and aggregate supply to contract it
E)short-run aggregate supply to stimulate the economy and aggregate demand to contract it

Question

Quizplus · Accepted Answer

Fiscal policy focuses on using government spending and taxation to influence aggregate demand and stabilize the economy by smoothing out business fluctuations. It does not focus on manipulating aggregate supply.

Fiscal Policy Focuses on Manipulating _____