Question

Fiscal policy refers to changes in

a. state and local taxes and purchases that are intended to achieve macroeconomic policy objectives.
b. the money supply and interest rates that are intended to achieve macroeconomic policy objectives.
c. federal taxes and purchases that are intended to fund the war on terrorism.
d. federal taxes and purchases that ar

Answer 1

Fiscal policy is the set of policies that relate to federal government spending, taxation, and borrowing. It aims to manage the economy and achieve macroeconomic policy objectives by adjusting spending and taxes. By changing spending or taxes, fiscal policy can shift aggregate demand and influence the business cycle.

Step-by-step explanation:

Fiscal policy is the set of policies that relate to federal government spending, taxation, and borrowing. It is one of the ways in which the government influences the economy. With changes in spending or taxes, fiscal policy can either shift the aggregate demand outward in the case of expansionary fiscal policy or inward in the case of contractionary fiscal policy. The goal of fiscal policy is to manage the business cycle and achieve macroeconomic policy objectives.