Community and Government

What Is Fiscal Policy? Types of Fiscal Policy and How Fiscal Policy Works

Written by MasterClass

Last updated: Oct 12, 2022 • 5 min read

How much money should the government collect in taxes, and how should the government spend the money that it raises or borrows, as the case may be? These are the central questions of fiscal policy. When combined with monetary policy, fiscal policy makes up economic policy, which is how governments attempt to influence and regulate the economy. While all governments rely on fiscal policy to promote economic growth, politicians and economists are constantly debating how and when government intervention is best.