Final answer:
Fiscal policy is a government tool to manage the economy through spending and taxation. Instruments of fiscal policy include changes in spending, taxation, and stimulus measures.
Step-by-step explanation:
Fiscal Policy
Fiscal policy is one of two policy tools for fine-tuning the economy (the other is monetary policy). While monetary policy is made by policymakers at the Federal Reserve, fiscal policy is made by Congress and the President.
The meaning of fiscal policy is that it involves the use of government spending and taxation to influence the overall economy.
The main goal of fiscal policy is to manage the business cycle and stabilize the economy. There are several instruments of fiscal policy, including changes in government spending, changes in taxation, and the use of fiscal stimulus and austerity measures.