Question

A group of students is studying for an economics quiz about economic cycles and how the government manages in an economy. In a market economy, strategies that change spending or taxes in order to influence economic conditions are known as:

O fiscal policy.
O equity promotion.
O monetary policy.
O economic stimulus.​

Answer 1

A fiscal policy.

Step-by-step explanation:

Fiscal policy deals with the government's taxation and spending policies and is the principal tool used by the government to influence aggregate demand and achieve macroeconomic policy objectives such as high employment, price stability, and economic growth.

Answer 2

A market economy is an economic system in which the production and distribution of goods and services are determined by the forces of supply and demand. In a market economy, the government can use various strategies to influence economic conditions, including fiscal policy and monetary policy.

Fiscal policy refers to the government's use of spending and taxation to influence the level of economic activity and manage the economy. This can include measures such as increasing government spending, reducing taxes, or a combination of both.

Monetary policy refers to the actions taken by a central bank, such as the Federal Reserve in the United States, to manage the supply and demand of money and credit in the economy. This can include measures such as adjusting interest rates or the amount of money in circulation.

The options "equity promotion" and "economic stimulus" are not typically used to describe government strategies to influence economic conditions in a market economy.