Fiscal Policy refers to the combined governmental decisions regarding a country's taxing and spending. The term fiscal policy is associated with British economist John Maynard Keynes, who believed that governments should influence macroeconomic productivity levels by doing such things as improving the employment rate, combating inflation, and flattening business cycles.
A shortfall that occurs when government spending exceeds government revenues, or taxes.
Monetary policy is a central bank’s actions that influence the country’s money supply and the overall economy.
The business cycle refers to the fluctuations in economic activity that an economy experiences over a period of time. It consists of expansions, or periods of economic growth, and contractions, or periods of economic decline.
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