Question

Fiscal policy is the government’s approach to?

Answer 1

Fiscal policy is the government's use of spending, taxation, and borrowing to influence the economy, aiming to manage the business cycle and achieve sustainable economic growth.

Step-by-step explanation:

Fiscal policy refers to the set of policies related to government spending, taxation, and government borrowing. It is a key tool used by the government to influence the economy and manage the business cycle. By adjusting spending levels and tax rates, the government can affect the aggregate demand and supply within the economy. An expansionary fiscal policy, characterized by increased spending or decreased taxes, is generally designed to stimulate the economy by shifting the aggregate demand curve outward. Conversely, a contractionary fiscal policy involves decreasing government spending or increasing taxes to slow down an overheated economy, resulting in an inward shift of the aggregate demand curve.

The primary aim of fiscal policy is to achieve a balanced economy wherein it neither grows too rapidly nor contracts sharply. The main areas of federal spending include national defense, Social Security, healthcare, and interest payments. The overall fiscal health can be assessed by looking at the government's budget deficit or surplus, and the cumulative total of these constitutes the government debt.

Answer 2

Taxing and spending

Explanation

Fiscal policy is the ways by which a state regulates its spending levels and tax rates to observe and control a nation's economics. It is the sister approach to monetary management by which a central bank controls a nation's currency supply. The two main models of expansionary fiscal policy are tax cuts and expanded state spending.