The fiscal policy represents government policies that influence macroeconomic conditions. Regulators attempt to improve unemployment rates, control inflation, stabilize business cycles, and influence interest rates to control an economy through a fiscal policy.
Fiscal policy is the government’s decision about how to use its budget. It is a mix of taxes, spending, and borrowing. It is a crucial part of macroeconomics because it can significantly impact an economy’s overall performance and stability, which affects everyone in society.
Fiscal policy is primarily based on British economist John Maynard Keynes (1883–1946), who believed that governments could change economic performance by adjusting tax rates and spending.