What are the two tools of fiscal policy?
Understand the Problem
The question is asking for the two primary tools used in fiscal policy, which typically refers to government spending and taxation. Understanding these tools helps us see how governments can influence economic activity.
Answer
tax rates and government spending
The final answer is tax rates and government spending
Answer for screen readers
The final answer is tax rates and government spending
More Information
The two main tools of fiscal policy are taxation and government spending. These tools are used to influence the economy, aiming to promote growth, control inflation, and reduce unemployment.
Tips
A common mistake is to confuse fiscal policy tools with monetary policy tools such as interest rates or open market operations.
Sources
- Fiscal Policy Tools | Definition & Examples - Lesson - Study.com - study.com
- Fiscal Policy: Taking and Giving Away - imf.org
- Fiscal Policy: Definition, Types and Business Effects - businessnewsdaily.com
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