Question

One of the roles of the US government is to ensure that the country is financially stable. Which of the following is the term for the government’s power to spend and tax? Select one: a. Fiscal policy b. National debt c. Expansionary policy d. Contractionary policy

Answer 1

Fiscal policy

Step-by-step explanation:

Fiscal policy refers to the actions of governments of adjusting taxation and spending to influence economic direction. The governments aim at maintaining stable prices and steady economic growth. Though several agencies, the state monitors economic indicators and adjusts its spending and taxation accordingly.

The fiscal policy combines with monetary policy to achieve the desired effects. In times of recessions, fiscal policy is used to stimulate economic growth.