Macroeconomics & Investing · Entry 15 of 71

What is Fiscal Policy?

Government taxing and spending to influence demand

Core Definition

Fiscal Policy refers to the use of government spending and tax policies to influence economic conditions, including the demand for goods and services, employment, inflation, and economic growth.

Primary Components

1. Government Spending & Taxation: Stimulative spending boosts demand; taxation acts as a cooling mechanism.
2. Managed by Executive & Legislative Branches: Driven by state and national legislatures rather than central banks.