What is Fiscal Policy? The usage of Government expenditures and taxation to control the economy is fiscal policy. In an attempt to pursue the strategic objectives of stable prices, economic growth, and infrastructure prosperity, fiscal policy is used to control the level of domestic final demand in the economy. There are two major factors of Government when it comes to fiscal policy. 1. Alter the amount and organization of taxation and/or amendment the rate of taxation 2. Changing the quantity of investments in various financial sectors. To control budget and tax levels and economy of the Government, it uses the mechanism of fiscal policy. It is a sister monetary policy tactic through which a federal reserve impacts the amount of money in circulation. Governments can