Fiscal policy involves increases or decreases in:
A)The money supply.
B)Interest rates.
C)Government spending and taxes.
D)Exports and imports.

Question

Quizplus · Accepted Answer

Fiscal policy involves changes in government spending and taxation. It is used by the government to affect the level of economic activity in a country. Increases in government spending can stimulate economic growth, while increases in taxes can dampen economic activity. Therefore, the correct answer is C. The other options, such as the money supply, interest rates, exports and imports, are affected by other economic policies such as monetary policy and trade policy.

Fiscal Policy Involves Increases or Decreases In