Fiscal policy:
A)uses the federal government's powers of spending and taxation to affect employment,the price level,and GDP.
B)uses the federal government's control over the money supply and interest rates to affect employment,the price level,and GDP.
C)can affect employment and prices,but not the level of GDP.
D)can affect employment and the level of GDP,but not the price level.
E)is most effective when employed by state governments rather than by the federal government.

Question

Quizplus · Accepted Answer

Fiscal policy involves the federal government's powers of spending and taxation to affect key economic indicators such as employment, price level, and GDP. It is one of the two primary tools of macroeconomic policy, the other being monetary policy. Fiscal policy affects the economy by increasing or decreasing government spending and taxes. When the government increases spending, it puts more money into the economy, which can create jobs and raise GDP. When the government decreases taxes, it frees up more money for individuals and businesses to spend or invest, which can stimulate economic growth. Overall, fiscal policy can have a significant impact on the state of the economy, making it an important area of study and practice for policymakers and economists.

Fiscal Policy