What are fiscal policies primarily concerned with?

Fiscal policies are primarily concerned with government spending and taxation. These policies are tools used by a government to influence the economy by adjusting its expenditure levels and revenue collection through taxes. When the government increases spending, it can stimulate economic activity by creating jobs and increasing demand for goods and services. Conversely, by reducing spending or increasing taxes, the government can cool down an overheated economy or address budget deficits.

These fiscal measures can directly affect aggregate demand, employment levels, and overall economic growth, making them crucial for managing economic cycles. They are distinct from monetary policies, which focus on controlling the money supply and interest rates to influence economic activity, typically handled by a nation's central bank.