Final answer:
Fiscal policy refers to the use of government spending and tax policy to influence the economy. It involves changes in government purchases and taxes to affect aggregate demand and/or aggregate supply.
Step-by-step explanation:
Fiscal policy refers to the use of government spending and tax policy to influence the economy. When the government makes decisions about taxes and spending, it is employing fiscal policy. Examples of fiscal policy include changes in government purchases and taxes. These decisions are made in order to affect aggregate demand and/or aggregate supply.