Fiscal policy determines government spending from "summary" of EBOOK: Macroeconomics by Rudiger Dornbusch,Stanley Fischer,Richard Startz
Fiscal policy plays a crucial role in determining government spending. It involves the use of government spending and taxation to influence the economy. When the government decides to increase its spending, it can boost demand in the economy, leading to increased economic activity.
By increasing government spending, the government can create jobs and stimulate economic growth. For example, when the government invests in infrastructure projects such as building roads and bridges, it not only creates jobs for workers but also improves the overall productivity of the economy.
On the other hand, when the government reduces its spendin...
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