The two main tools of macroeconomic policy include monetary policy, and fiscal policy, which involves __________ spending.

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The prompt asks to identify what fiscal policy involves in terms of spending: monetary policy and fiscal policy, which involves __________ spending.
First, notice that the provided answer field identifies the intended completion as 'government'. This aligns with standard macroeconomic definitions, where fiscal policy refers to decisions by the government about spending and taxation to influence the economy.
However, the answer options list is missing in the data. Without a set of alternative choices to compare, we cannot contrast each option's correctness. Despite that, we can reason from fundamental concepts: fiscal policy is the state’s (government’s) use of its budget to affect aggregate demand, employment, and growth, typically through government spending and taxation, not through central bank actions.
If we consider typical distractors that might appear in such a question, options like 'private' spending, 'corporate' spending, or 'household' spending would be inaccurate because fiscal policy targets government-based fiscal instruments, not private actors directly. Similarly, 'monetary' spending would be a category mismatch since monetary policy operates through the central bank, not via the government budget.
In sum, given the standard definition, the blank should be filled with 'government' spending, since fiscal policy centers on government decisions about how much to spend and where to allocate public funds to influence economic outcomes.

ECON 203-0001 Chapter 1

The two main tools of macroeconomic policy include monetary policy, and fiscal policy, which involves __________ spending.

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