What is fiscal policy primarily concerned with?

Fiscal policy is primarily focused on government spending and tax policies because it involves the use of government revenue collection (taxation) and expenditure (spending) to influence the economy. Through fiscal policy, a government can stimulate economic growth during a recession by increasing spending or cutting taxes, thereby increasing consumer demand. Alternatively, during inflationary periods, a government might decrease spending or raise taxes to cool down the economy.

This approach contrasts with monetary policy, which deals with regulating interest rates and controlling the money supply, as well as other mechanisms related to the banking system. While foreign trade interventions and currency value control do have economic implications, they fall outside the realm of fiscal policy. Therefore, focusing on government spending and taxation is central to understanding how fiscal policy operates and shapes overall economic conditions.