What does fiscal policy involve?

Fiscal policy primarily involves the government's decisions regarding taxation and spending. This encompasses how much revenue the government collects through taxes and how it decides to allocate that revenue to various programs, services, and investments. By adjusting tax rates and modifying government spending on infrastructure, education, healthcare, and social services, fiscal policy can influence economic activity, stimulate growth during a recession, or manage inflation during periods of rapid economic expansion.

In contrast, monetary control and interest rate regulation are aspects of monetary policy, which is focused on managing the money supply and controlling interest rates, typically carried out by a central bank. Trade agreements and tariffs relate to international trade policy and do not directly connect to how the government manages its own expenditures or revenues. Similarly, the regulation of stock markets and investments pertains to financial regulation and does not fall under fiscal policy, which is specifically about government financial operations.