What is Fiscal Policy? - Definition, Effects & Example


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question 1 of 3

Which one of the following is the best explanation of fiscal policy?

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1. What are the two primary tools of fiscal policy?

2. What's a companion policy to fiscal policy that a government implements to affect an economy?

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About This Quiz & Worksheet

Use this quiz/worksheet combo to help you test your understanding of fiscal policy. Some of the information you'll be quizzed on includes an explanation of fiscal policy as well as the school of thought that supports a fiscal policy of strong government spending during times of economic troubles.

Quiz & Worksheet Goals

Students will be tested on these concepts:

  • Two primary tools of fiscal policy
  • The companion policy to fiscal policy
  • Differences between a debt and a deficit

Skills Practiced

This quiz and worksheet help students practice these skills:

  • Reading comprehension - ensure that you draw the most important information from the related lesson on fiscal policy
  • Distinguishing differences - compare and contrast topics from the lesson, such as debt and deficit
  • Information recall - access the knowledge you've gained regarding the two primary tools of fiscal policy
  • Knowledge application - use your knowledge to answer questions about a companion to fiscal policy and the school of thought that supports a fiscal policy of strong government spending during times of economic troubles

Additional Learning

To learn more about how governments collect and spend their money, review lesson, 'What is Fiscal Policy?'. The lesson includes these objectives:

  • Define fiscal policy and contrast it with monetary policy
  • Describe how government spending affects the economy
  • Explain how the government generates revenue through taxation
  • Detail what happens to a government if it borrows more money than it can repay
  • Understand how fiscal policy works to benefit a government and its citizens