What is a primary feature of fiscal policy?

The primary feature of fiscal policy revolves around managing government expenditure and revenue. Fiscal policy involves the government's use of spending and taxation to influence the economy. By increasing or decreasing spending, or by adjusting tax rates, the government aims to either stimulate economic growth or curtail inflation. This approach directly impacts aggregate demand, employment levels, and overall economic health, distinguishing fiscal policy from other economic strategies such as monetary policy, which focuses on managing the money supply and interest rates through the central bank.

While regulation of financial markets and adjustments to federal interest rates are important components of economic policy, they fall under the scope of monetary policy rather than fiscal policy. Similarly, controlling inflation through monetary policy is again a distinct area that does not align with the core features of fiscal policy, which specifically targets government financial activities to manage the economy.