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The government can change its expenditures and its tax collection in order to achieve full employment, control inflation, or encourage growth. By increasing taxes and reining in expenditures, it helps contract the economy. The government can lower taxes and spend more in order to expand the economy.

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11y ago
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9y ago

The instruments of fiscal policy are taxation and government expenditure. Altering these two types of expenses can affect several aspects in the nation's economy.

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Q: What are the instruments of fiscal policy?
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