The government implements fiscal policy when it changes
A) spending and/or interest rate.
B) money supply and/or taxes.
C) taxes and/or spending.
D) taxes and/or interest rate.

Question

Quizplus · Accepted Answer

Fiscal policy refers to the government's use of changes in taxation and government spending to impact economic growth and stability. Therefore, the correct answer is C) taxes and/or spending. The government uses two main tools for fiscal policy: changes in taxes and changes in spending. By increasing or decreasing taxes, the government can either restrict or stimulate spending, depending on the situation. Similarly, by increasing or decreasing spending, the government can either stimulate or restrict economic activity. So, the correct answer is C) taxes and/or spending.

The Government Implements Fiscal Policy When It Changes