What is fiscal policy?

Fiscal policy refers to the government’s decisions surrounding their spending and taxation in order to influence economic conditions. Governments usually implore fiscal policy to either promote strong and sustainable growth through expansionary policies, or halt unsustainable economic growth through contractionary policies. The government can influence economic conditions by altering the level and types of taxes, the degree and form of borrowing and the composition of spending. This is especially important for macroeconomic conditions, extending to employment, inflation, demand for goods and services and economic growth.