Question

What is meant by Fiscal policy?

Hint:

Fiscal Policy = Government's economic plan using its budget (spending and taxes).

Answer 1

Fiscal policy is the use of government spending and taxation to influence the economy. It is a key tool used by governments to manage aggregate demand and achieve macroeconomic goals such as full employment, price stability, and economic growth. For example, to combat a recession, a government might increase its spending or cut taxes (expansionary fiscal policy).