Question

The use of government spending and taxes to influence economic growth. A key factor is congressional action to increase or decrease income taxes. For example, to slow the economy and halt inflation, Congress can increase income tax rates, which has the effect of limiting how much people can spend or save.

a) Fiscal Policy
b) Monetary Policy
c) Supply-side Economics
d) Keynesian Economics

Answer 1

Fiscal policy is the use of government spending and tax policy to influence the economy. It involves changes in spending and taxes to shift the aggregate demand curve. An example is when Congress increases income tax rates to slow down the economy and control inflation.

Step-by-step explanation:

Fiscal policy is the use of government spending and tax policy to influence the path of the economy over time. It involves changes in spending and taxes to shift the aggregate demand curve outward or inward, depending on whether the goal is to stimulate or slow down the economy. An example of fiscal policy is when Congress increases income tax rates to limit people's spending or saving, thereby slowing down the economy and controlling inflation.