Question

What are some of the ways fiscal policy might encourage economic growth?

Short answer

Taxes are cut and spending is increased, which frequently requires borrowing through the issuance of government debt.

Step-by-step solution

Definition

Fiscal Policy for Quality Life:

The government manages the American economy through Congress in order to keep productivity high, employ as much available labor as feasible, and keep inflation low. It is in charge of budgetary policy and has the ability to improve the human capital of a society.

Explanation

Fiscal policy measures are used by governments with economic clout. Two of the most common examples are changes in taxation and government spending. To encourage growth, taxes are cut and spending is increased, which frequently necessitates borrowing through the issuing of government debt. Government spending on goods and services can be improved through fiscal policy, resulting in increased aggregate demand and economic activity.