Fiscal policy most directly affects the economy by increasing or decreasing:

Question

Quizplus · Accepted Answer

Fiscal policy involves government spending and taxation, which have a direct impact on aggregate demand in the economy. Increasing government spending or lowering taxes will stimulate aggregate demand, while decreasing government spending or raising taxes will decrease aggregate demand. The other options, such as interest rates, long-run aggregate supply, and the money supply, may be indirectly affected by fiscal policy but are not the primary targets of the policy.

Fiscal Policy Most Directly Affects the Economy by Increasing or Decreasing