Answer:
1a) government spending
2c) taxes
Explanation:
Fiscal policy is an instrument that the government has to stimulate or discourage economic activity. When the economy is inflated and overheated (high GDP and low unemployment), the government adopts a contractionary fiscal policy, reducing spending and raising taxes. On the contrary, when the economy is low growth and high unemployment, the government adopts an expansionary fiscal policy, which consists of increasing public spending and lowering taxes. Thus, the government expects demand to warm up by increasing household consumption and public spending. This will cause GDP to rise and companies to hire.
