Use the chart to answer the following question. Fiscal Policy Government Spending Taxes A increase increase B. decrease decrease increase decrease D decrease increase Which of the following is an appropriate fiscal policy if the economy is experiencing an increase in price level?

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Fiscal Policy and Money Market

Fiscal policy is one of the important tools that is used by the government to control inflation or aggregate demand in the economy. Under this policy, there are two rules which are used by the government, one is the expenditure of the government and the other is the taxation or income of the government which it collects from the public.