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Answer :
Final answer:
Deliberate manipulation of government spending and taxes to promote macroeconomic goals is known as Fiscal Policy, which is employed in regulating the economy through expansionary or contractionary measures, especially advocated by Keynesian macroeconomics. The correct option is A.
Explanation:
The deliberate manipulation of government spending and taxes to promote macroeconomic goals is known as Fiscal Policy. Fiscal policy involves adjusting government spending levels and tax rates to influence the state of the economy.
Keynesian macroeconomics advocates for using fiscal policy as a tool to manage the business cycle, recommending expansionary fiscal policy, such as tax cuts or increases in government spending, during a recession to shift the aggregate demand curve to the right.
Alternatively, during periods when the economy is operating above potential GDP, and there is concern over inflation, contractionary fiscal policy—employing tax increases or government spending cuts—is suggested to shift the aggregate demand curve to the left.
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