Fiscal and monetary policy

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The federal government has the power to make policies that influence the economy. Article I of the Constitution gives Congress this power. One way the government influences the economy is called fiscal

policy.

Fiscal policy is how the government chooses to raise and spend money.

The fiscal policy of the United States is mostly determined by the federal budget. Every year, the government estimates how much revenue it expects to receive through taxes and what it will spend money on. Sort each example by whether it represents taxes or government

spending.

The federal budget includes hundreds of billions of dollars to pay for the needs of the Department of Defense.

Every year, individuals pay a percentage of their income to the federal government.

The government collects fees, called

tariffs,

on goods imported into the country to make domestic goods more competitive.

A renewable energy business receives a government grant to pay for new research.

Taxes

Government spending