What are the two tools of fiscal policy that governments can use to affect the level of aggregate demand?
A) government spending and taxation
B) government spending and technology improvements
C) taxation and controlling imports
D) taxation and controlling exports

Question

Quizplus · Accepted Answer

The two tools of fiscal policy that governments can use to affect the level of aggregate demand are government spending and taxation. Government spending involves the government investing money in specific sectors of the economy to create employment opportunities and increase consumer spending. Taxation involves the government collecting money from the public to reduce spending and reduce inflationary pressures. Therefore, choice A is the correct answer.

What Are the Two Tools of Fiscal Policy That Governments