Question

Fiscal policy refers to the:A. manipulation of government spending and taxes to stabilize domestic output, employment, andthe price level.B. manipulation of government spending and taxes to achieve greater equality in the distributionof income.C. altering of the interest rate to change aggregate demand.D. fact that equal increases in government spending and taxation will be contractionary.

Answer 1

Answer:

(A) manipulation of government spending and taxes to stabilize domestic output, employment, and the price level.

Explanation:

Fiscal policy is a means used by the government for the maintenance of the economy of the nation. This is the means by which the government influences a nation's money supply.

When the money in the economy increases alongside the increase of demand, the value of money in the economy will be decreased. Fiscal policy can now be used to curb excess money in the economy. Fiscal policy is mainly for the stabilization of the nation's economy.