Policymakers can increase output by enacting policies that expand government spending, consumption, investment, or net exports. They could also reduce taxes.

Question

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Policymakers have the ability to influence outputs through fiscal policy, which includes government spending, taxes, and net exports. By increasing government spending, consumption or investment, or by promoting exports over imports, policymakers can increase overall output. They may also choose to reduce taxes, which can stimulate consumption and investment in the private sector, ultimately leading to higher output.

Policymakers Can Increase Output by Enacting Policies That Expand Government