Fiscal policy plays a crucial role in maintaining economic stability and promoting growth in a country. It refers to the government’s decisions regarding taxation and spending to influence the economy. By adjusting tax rates and government spending levels, policymakers can stimulate or slow down economic activity. In times of economic downturn, the government can increase spending to boost demand and create jobs. Conversely, during periods of high inflation, the government can raise taxes to reduce demand and control prices. Overall, fiscal policy is a powerful tool that can help countries navigate through various economic challenges. It is important for governments to implement sound fiscal policies to ensure a healthy and sustainable economy.