Fiscal policies refer to the strategies that a government uses to manage its economy through changes in spending and taxation. By adjusting these two levers, governments aim to influence economic activity, control inflation, and promote employment. For example, increasing government spending can stimulate economic growth, while raising taxes might help reduce budget deficits. Governments often implement fiscal policies during different economic conditions. In times of recession, they may adopt expansionary fiscal policies, such as increased public spending or tax cuts, to boost demand. Conversely, during periods of economic growth, they might use contractionary policies to cool down the economy and prevent inflation.