Fiscal Policy refers to the use of government spending and taxation to influence the economy. By adjusting these levers, governments aim to promote economic growth, reduce unemployment, and control inflation. For instance, during a recession, a government might increase spending or cut taxes to stimulate demand. Conversely, in times of economic boom, it may reduce spending or increase taxes to cool down the economy. The effectiveness of fiscal policy can depend on various factors, including the current economic conditions and the responsiveness of consumers and businesses to changes in government policy.