What is the purpose of fiscal policy?
A) Fiscal policy uses the federal government's powers over spending and taxation to affect employment, the price level, and GDP.
B) Fiscal policy uses the federal government's powers over the money supply and interest rates to affect employment, the price level, and GDP.
C) Fiscal policy uses the federal government's powers over spending and taxation to affect employment and prices, but NOT to affect the level of GDP.
D) Fiscal policy uses the federal government's powers over spending and taxation to affect employment and the level of GDP, but NOT to affect the price level.

Question

What is the purpose of fiscal policy?  
A) Fiscal policy uses the federal government's powers over spending and taxation to affect employment, the price level, and GDP. 
B) Fiscal policy uses the federal government's powers over the money supply and interest rates to affect employment, the price level, and GDP. 
C) Fiscal policy uses the federal government's powers over spending and taxation to affect employment and prices, but NOT to affect the level of GDP. 
D) Fiscal policy uses the federal government's powers over spending and taxation to affect employment and the level of GDP, but NOT to affect the price level.

Quizplus · Accepted Answer

Fiscal policy is a government intervention tool that influences the economy using government spending and tax policies. The primary purpose of fiscal policy is to stabilize the economy by addressing issues such as unemployment, inflation, and economic growth. By using its powers over spending and taxation, the government can increase or decrease demand for goods and services, which can impact employment, the price level, and GDP.

What Is the Purpose of Fiscal Policy