What is "fiscal policy"?

A Central bank actions on money supply

B Government use of taxation and spending to influence the economy

C Private sector investment decisions

D International trade agreements

✓ Correct Answer: Option B

Fiscal policy involves government decisions about taxation and spending to influence aggregate demand and the economy.

💡 Why is B) the correct answer?

The correct answer to the question "What is "fiscal policy"?" is Option B: Government use of taxation and spending to influence the economy.

The other options — A) Central bank actions on money supply, C) Private sector investment decisions, D) International trade agreements — are incorrect for this IB Exam Prep question. As explained above: Fiscal policy involves government decisions about taxation and spending to influence aggregate demand and the economy.

📚 About This IB Exam Prep Practice Question

This 2-level IB Exam Prep question from the Economics topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free IB Exam Prep practice test or use flashcards for spaced repetition review.

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What is "fiscal policy"?

✓ Correct Answer: Option B

📚 About This IB Exam Prep Practice Question

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