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

Question

Quizplus · Accepted Answer

Fiscal policy involves government spending and taxation which can impact aggregate demand by either increasing it through expansionary policies (increased spending, decreased taxes) or decreasing it through contractionary policies (decreased spending, increased taxes). Fiscal policy does not have a direct impact on short-run or long-run aggregate supply, and it is monetary policy (not fiscal policy) that directly affects the money supply.

Fiscal Policy Most Directly Affects the Economy by Increasing or Decreasing