Describe how fiscal policy is used by the U.S. government to achieve s

QUESTION

Describe how fiscal policy is used by the U.S. government to achieve stability.

What will be an ideal response?

ANSWER

Answer: The government can stimulate the economy as needed by a policy of taxation and borrowing. Lower taxes tend to stimulate a sluggish economy and government borrowing can be used to increase the economy’s money supply. Alternatively, in an economic boom, taxes can be raised and borrowing lessened.
Explanation: As part of fiscal policy, the government can borrow money and raise or lower taxes.