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Fiscal policy refers to the
Multiple Choice
a. altering of the interest rate to change aggregate demand.
b. deliberate changes in government spending and taxes to achieve greater equality in the distribution of income.
c. deliberate changes in government spending and taxes to stabilize domestic output, employment, and the price level.
d. fact that equal increases in government spending and taxation will be contractionary.

Respuesta :

Answer: Option (c) is correct.

Explanation:

Correct option: Deliberate changes in government spending and taxes to stabilize domestic output, employment, and the price level.

Fiscal policy refers to the policy that is used by the government to stabilize the domestic output, employment and price level. Government uses contractionary and expansionary fiscal policy to stabilize the economy at the equilibrium level.

Changes in government spending and taxes are the tools of the fiscal policy through which government stabilize the economy and it generally affects the aggregate demand & level of economic activities in the country.

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