Question

The total value of a country's output of final goods and services in a given year is known as the gross domestic product (GDP). ____________ refers to the efforts of the federal government to keep the economy stable by increasing or decreasing taxes and/or government spending. A. Monetary policy B. Incomes policy C. Fiscal policy D. Cyclical policy

Answer 1

Answer:

Option C ,fiscal policy is the correct answer.

Explanation:

Fiscal policy deals with the management of economy of a nation using  using economic tools such as government's expenditure and taxes.

When government envisaged that there would be so much money in circulation in the coming year that would bring about more than one single-digit inflation, government raises percentages levied as taxes so as to reduce purchasing power,hence control the quantity of money in the hands of individuals.

On the other hand, if government perceives that the economy is not booming enough due to lack of enough cash in the hands of the households,it reduces taxes so as to raise disposable income or increases its expenditure since that would enable money to be paid to contractors who are ultimately the households