Taxing and spending are related to fiscal policy, whereas monetary policy is related to regulating the economy through manipulating credit and interest rates.
The use of taxation and expenditure by the government to impact the economy is known as fiscal policy. Fiscal policy is often used by governments to encourage robust, long-term growth and lower poverty.
Due to its capacity to influence the overall quantity of production generated, or gross domestic product, fiscal policy is a crucial instrument for controlling the economy. A fiscal expansion's first effect is to increase consumer demand for goods and services. Due to the increased demand, both output and prices rise.
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