Fiscal policy refers to
A) changes in the amount of government expenditures and taxes to achieve particular economic objectives.
B) changes in the composition of a given amount of government expenditures to achieve particular economic objectives.
C) changes in interest rates initiated by government action.
D) any change in government spending or taxes that has the intended effect of destabilizing the economy.

Question

Quizplus · Accepted Answer

Fiscal policy involves changes in government expenditures (spending) and taxes in order to achieve certain economic objectives, such as stimulating economic growth or reducing inflation. This can involve increasing government spending and/or reducing taxes during a recession to stimulate demand, or reducing spending and/or increasing taxes during an economic boom to reduce inflationary pressures.

Fiscal Policy Refers to