In addition, fiscal policy can affect the SUPPLY-SIDE of the economy by providing incentives to These two policies are used in various combinations to direct a country's economic goals. Fiscal measures are frequently used in tandem with monetary policy to achieve certain goals. Fiscal policy, measures employed by governments to stabilize the economy, specifically by manipulating the levels and allocations of taxes and government expenditures. It influences the economy using … Fiscal policy refers to the use of government spending and tax policies to influence economic conditions. Fiscal policy is largely based on ideas from John Maynard Keynes, who argued governments could stabilize the … It can lead to increased employment and income. It is used in conjunction with the monetary policy implemented by central banks. Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy. fiscal policy An instrument of DEMAND MANAGEMENT that seeks to influence the level and composition of spending in the economy and thus the level and composition of output (GROSS DOMESTIC PRODUCT). Fiscal policy generally has a greater impact on consumers. Fiscal policy is how Congress and other elected officials influence the economy using spending and taxation. Companies also benefit as they see increased revenues. It is the sister strategy to monetary policy through which a central bank influences a nation's money supply. Fiscal policy involves the government changing the levels of taxation and government spending in order to influence aggregate demand (AD) and the level of economic activity.

However, if the economy is near full capacity, expansionary fiscal policy risks sparking inflation.

Definition of fiscal policy. Essentially, it is targeting aggregate demand. Fiscal policy refers to a government's spending and taxation policies intended to maintain economic stability, which is indicated by levels of unemployment, interest rates, prices and economic growth.