Taxation and government spending are examples of fiscal policy tools used to stabilize an economy.

Question

Quizplus · Accepted Answer

Fiscal policy refers to government actions influenced by taxation and government spending to stabilize the economy. By altering tax rates or government spending levels, the government can impact GDP, employment and price levels, which in turn influences the overall economic activity. Therefore taxing and government spending are examples of fiscal policies used to regulate the economy.

Taxation and Government Spending Are Examples of Fiscal Policy Tools