Question

Fiscal policy is: Group of answer choices the Federal Reserve's control of interest rates. the use...

Fiscal policy is:

Group of answer choices

the Federal Reserve's control of interest rates.

the use of government spending and taxation to move the economy toward meeting its economic goals.

the advocating of tax reductions, regardless of the state of the economy.

a change in the money policy to solve domestic problems.

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Answer #1

The correct answer is 'Option B'.

The fiscal policy is an economic policy which is used to influence the economy of a country by changing the taxes or government spending or both. An expansionary fiscal policy increases the government spending or reduces taxes to increase the aggregate demand and the contractionary fiscal policy reduces the government spending or increases taxes to stimulate the economy by increasing the aggregate demand. Therefore, the correct answer is 'Option B'.

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