Question

Which statement best describes fiscal policy?

Options

• Policy of the central bank regarding money supply

• Policy of the government about spending, taxation and borrowing

• Policy of firms regarding pricing of goods

• Policy of consumers about saving and consumption

Answer 1

Policy of the government about spending, taxation and borrowing

Explanation: 

Fiscal policy is the government’s policy dealing with revenue, expenditure and debt to achieve economic objectives.
It includes decisions on spending, taxation and borrowing that affect aggregate demand.