Fiscal policy refers to the actions of which two government entities?

• A. The actions of the President (executive) and Congress (legislature) to tax and spend.
• B. A plan to balance the budget in the future.
• C. The rate at which prices rise over time.
• D. The process by which laws are enacted.

Answer: (A)

Fiscal policy is about how the government uses taxes and spending to influence the economy. It relies on the two main branches—the President, who proposes the budget and tax measures, and Congress, which passes the laws that set tax rules and allocate spending. Together, their actions determine how much the government collects and how it spends, shaping overall demand, jobs, and growth. The other options don’t describe this two-branch tax-and-spend mechanism: balancing the budget in the future is a budgeting plan, not the actual fiscal policy; inflation is a rise in prices and relates to monetary conditions; and the process of enacting laws is the broader lawmaking process, not specifically fiscal policy.