If the budget deficit is lower than it was last year, we could say that      A) the general government debt will fall. B) other things being equal, the level of aggregate demand will be higher than it was last year. C) other things being equal, the level of aggregate demand will be lower than it was last year. D) the government must have an expansionary fiscal stance

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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.