Governments’ main tools for managing the economic cycle are fiscal, defined as being concerned primarily with taxing and spending. Thus when governments want to stimulate their countries’ economies, they can cut taxes, increase government spending and even distribute stimulus checks, making more money available for spending and investment. On the other hand, when they think economies are growing so fast as to be at risk of overheating — setting the scene for a resulting slowdown — governments can increase taxes or cut spending, reducing demand in their economies and thereby slowing economic
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