Q. With which of the following the fiscal policy is related to ?
Answer: Taxation and government spending
Notes: Fiscal policy is the government's use of taxation and spending to influence the economy. The government adjusts its spending levels and tax rates to monitor and influence the nation's economy. The two main instruments of fiscal policy are changes in the level and composition of taxation and government spending in various sectors. Fiscal policy is one of the main policy approaches used by economic managers to steer the broad aspects of the economy. The other main policy approach is monetary policy, which deals with the supply of money in the economy and the rate of interest.