Fiscal Policy Definition

Fiscal policy is the use of government spending and taxation to influence the economy. Fiscal policy can be used to stabilize the economy, promote economic growth, or redistribute income.

The two main tools of fiscal policy are government spending and taxation. Government spending includes expenditures on public goods and services, such as national defense, education, and infrastructure. Taxation includes levies on income, profits, and consumption.

Fiscal policy is usually implemented by the government’s budget office or finance ministry. In the United States, fiscal policy is determined by the President and Congress.