Fiscal policy is:
A) the attempt by the Federal Reserve to affect the economy by changing the interest rate.
B) the government's effect on aggregate output and employment through changes in the money supply.
C) the government's effect on aggregate output and employment through changes in government purchases, taxes, and transfer payments.
D) the attempt by financial institutions to affect the economy by changing bank lending activities.

Question

Quizplus · Accepted Answer

Fiscal policy involves government actions to influence the economy through changes in government spending, taxation, and transfer payments, which directly affect aggregate output and employment.

Fiscal Policy Is