Question

The country of Ukanturk has been facing an economic downturn for two consecutive years. To revive the financial condition of the country, its government tries to influence the economy through taxation and spending decisions that are designed to encourage growth and increase employment. In this scenario, the government of Ukanturk is implementing its _____. monetary policy fiscal policy investment policy supply-side policy

Answer 1

Fiscal policy.

Step-by-step explanation:

Fiscal policy refers to a policy that is utilize by the government of a particular nation to maintain the full employment level in an economy. A government of a nation implement this policy though changes in taxes and changes in government spending.

Fiscal policies are of two types:

(i) Expansionary fiscal policy:

In this fiscal policy, a government restore the full employment level by reducing taxes and increases government spending.

(ii) Contractionary fiscal policy:

In this fiscal policy, a government restore the full employment level by increasing taxes and decreases government spending.

Therefore, the government of Ukanturk its fiscal policy to cope up with the economic downturn.