The correct answer is D. All of the above.
Fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy. The two main tools of fiscal policy are taxation and government expenditure.
Taxation is a way for the government to collect revenue from individuals and businesses. The government can use this revenue to fund public goods and services, such as roads, schools, and hospitals. It can also use it to provide social safety net programs, such as unemployment benefits and food stamps.
Government expenditure is the amount of money that the government spends on goods and services. This includes spending on things like national defense, education, and infrastructure. The government can also use its spending to stimulate the economy by providing tax breaks or by increasing its spending on infrastructure projects.
Interest rates are the cost of borrowing money. The government can use interest rates to influence the economy by raising or lowering them. When interest rates are high, it is more expensive to borrow money. This can discourage businesses from investing and consumers from spending. When interest rates are low, it is cheaper to borrow money. This can encourage businesses to invest and consumers to spend.
All of these tools can be used by the government to influence economic activity. The government can use fiscal policy to stimulate the economy when it is in a recession or to slow down the economy when it is growing too quickly.