CONTENT STATEMENT
The federal government uses spending and tax policy to maintain economic stability and foster economic growth. Regulatory actions carry economic costs and benefits.
Content elaboration
Fiscal policy is government decision-making about taxing and spending in an attempt to regulate the American economy. In theory, fiscal policy falls into two broad categories:
increased government spending and/or reduced taxes to encourage economic growth; and
decreased government spending and/or increased taxes to slow economic growth.
The imposition of government regulations may foster economic benefits such as prohibiting unfair business practices and providing consumer protections. Government regulations may carry costs such as reduced corporate profits and slower economic growth.
EXPECTATIONS FOR LEARNING
Explain how the federal government uses fiscal policy to affect changes in the nation’s economic conditions.