What does fiscal policy primarily deal with?

Fiscal policy primarily deals with government policies involving taxation and borrowing. It encompasses the decisions made by the government regarding its spending and revenue collection through taxes. By adjusting these variables, the government can influence the overall economic activity. For instance, increasing government spending can stimulate economic growth, while increasing taxes can help slow down an overheated economy. This policy is crucial for managing economic fluctuations and promoting stability.

The other options relate to different aspects of economic policy. Regulating international trade pertains to trade policy and tariffs, which influence exports and imports but are not classified as fiscal policy. Adjusting interest rates falls under monetary policy, which is managed by a central bank and affects the cost of borrowing and overall money supply. Lastly, controlling the money supply is also a function of monetary policy rather than fiscal policy. Understanding these distinctions is essential for comprehending how different economic tools operate within the economy.