Question

________ are a form of tax and spending rules that can affect aggregate demand in the economy without any changes in legislation.

Answer 1

Fiscal policies are a form of tax and spending rules that can affect aggregate demand in the economy without any changes in legislation.

• To achieve economic objectives, fiscal policy entails adjustments to taxation or spending (government budget).

• A fiscal policy example would be to alter the corporate tax rate. Fiscal policy: Modifications to Federal expenditure or tax rates with the aim of affecting the macroeconomy.
• Fiscal policy is one way that policymakers can affect the overall demand. The aggregate-demand curve moves to the right in response to an increase in government spending or a decrease in taxation.
• The aggregate-demand curves move to the left in response to a reduction in government spending or an increase in taxes. Fiscal policy is the method by which a government modifies its tax and expenditure rates to track and affect a country's economy.

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