Final answer:
Fiscal policy primarily affects aggregate demand through the government's decisions on taxes and spending. Option (B) is correct.
Step-by-step explanation:
Most economists believe that fiscal policy primarily affects aggregate demand. Fiscal policy refers to the government's decisions regarding taxes and spending, which can have a significant impact on the overall demand for goods and services in the economy. By adjusting tax rates and government spending, the government can influence consumer spending, investment, and overall economic activity.
FISCAL policy is the use of government spending and. taxation to influence the economy. Governments typi- cally use fiscal policy to promote strong and sustain- able growth and reduce poverty.
Balance between structural (or cyclically adjusted) revenue and expenditure; or limit on structural (or cyclically adjusted) deficit as a proportion of GDP. Balance between current revenue and current expenditure (that is, borrowing permitted only to finance capital expenditure).
There are three types of fiscal policy.They are neutral policy, expansionary policy,and contractionary policy.