Overview
Fiscal policy is a critical tool used by governments to manage economic activity, particularly in controlling inflation. By adjusting spending and taxation, governments can influence demand, stabilize prices, and promote economic growth. Understanding fiscal policy helps individuals grasp how govern...
Key Terms
Example: Increasing taxes to reduce inflation.
Example: A 2% inflation rate means prices increase by 2% over a year.
Example: Funding for public schools and infrastructure.
Example: Income tax is a common form of taxation.
Example: When a government spends $1 trillion but only collects $900 billion in taxes.
Example: A country’s GDP growing by 3% annually.
Related Topics
Key Concepts
Government SpendingTaxationInflation ControlEconomic Growth