Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
interest rates
B
government spending and taxation
C
trade balances
D
foreign exchange rates
Understanding the Answer
Let's break down why this is correct
Answer
Fiscal policy primarily aims to influence the economy through adjustments in government spending and taxation. When the government decides to spend more money on things like roads, schools, or healthcare, it can help create jobs and boost economic activity. Conversely, if the government raises taxes, it can slow down spending by individuals and businesses, which might help control inflation. However, when the government consistently spends more than it collects in taxes, it can lead to an increase in national debt. For example, if a country spends a lot on infrastructure projects but does not raise taxes to cover those costs, it may borrow money, which increases its national debt.
Detailed Explanation
Fiscal policy is about how the government uses money. Other options are incorrect because Some might think interest rates are the main tool for fiscal policy; People may confuse trade balances with fiscal policy.
Key Concepts
Fiscal Policy
National Debt
Economic Growth
Topic
Fiscal Policy and National Debt
Difficulty
hard level question
Cognitive Level
understand
Ready to Master More Topics?
Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.